Dahl Manufacturing is making its operating budget for the 4 th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows:
$$\begin{array} { l l l }
\text { Variable: } & \text { Miscellaneous: } & 5 \% \text { of sales } \
\text { Fixed: } & \text { Salary expense: } & \$ 12,600 \text { per month } \
& \text { Rent expense: } & \$ 5,200 \text { per month } \
& \text { Depreciation expense: } & \$ 4,000 \text { per month } \
& \text { Admin expense: } & \$ 5,000 \text { per month }
\end{array}$$
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How much is the net operating income/(loss) in November?

Question

Dahl Manufacturing is making its operating budget for the 4 th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows:
$$\begin{array} { l l l } 
\text { Variable: } & \text { Miscellaneous: } & 5 \% \text { of sales } \
\text { Fixed: } & \text { Salary expense: } & \$ 12,600 \text { per month } \
& \text { Rent expense: } & \$ 5,200 \text { per month } \
& \text { Depreciation expense: } & \$ 4,000 \text { per month } \
& \text { Admin expense: } & \$ 5,000 \text { per month }
\end{array}$$
-
How much is the net operating income/(loss) in November?

Quizplus · Accepted Answer

To calculate the net operating income for November, we first calculate the total expenses and then subtract them from the sales revenue. Sales in November are $65,000. The cost of goods sold is 40% of sales, which is $26,000. Miscellaneous expenses are 5% of sales, which is $3,250. Fixed expenses total $26,800 ($12,600 salary + $5,200 rent + $4,000 depreciation + $5,000 admin). Total expenses are $26,000 + $3,250 + $26,800 = $56,050. Net operating income is $65,000 - $56,050 = $8,950.

Dahl Manufacturing Is Making Its Operating Budget for the 4th

Dahl Manufacturing Is Making Its Operating Budget for the 4^th