Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000. If the company's sales for a month are $738,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

Question

Quizplus · Accepted Answer

The contribution margin is calculated as 12% of $738,000, which is $88,560. Subtracting the fixed expenses of $84,000 from the contribution margin gives a net operating income of $4,560.

Gayne Corporation's Contribution Margin Ratio Is 12% and Its Fixed