Gayne Corporation's contribution margin ratio is 16% and its fixed monthly expenses are $45,500. If the company's sales for a month are $302,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

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Quizplus · Accepted Answer

The contribution margin is calculated as 16% of $302,000, which is $48,320. Subtracting the fixed expenses of $45,500 from the contribution margin gives a net operating income of $2,820.

Gayne Corporation's Contribution Margin Ratio Is 16% and Its Fixed