Schrute Farm Sales buys portable generators for $470 and sells them for $750 He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $6000 a month rent for his store, and also pays $1800 a month to his staff in addition to the commissions. Mr. Schrute sold 600 generators in June. If Mr. Schrute prepares a contribution margin income statement for the month of June, what would be his operating income?
A)$304,500
B)$153,300
C)$450,000
D)$137,700

Question

Quizplus · Accepted Answer

- Total revenue: $750 x 600 = $450,000 
- Cost of goods sold: $470 x 600 = $282,000 
- Gross profit: $168,000 
- Sales commission: 5% x $450,000 = $22,500 
- Contribution margin: $168,000 - $22,500 = $145,500 
- Operating expenses: $6,000 (rent) + $1,800 x 10 (staff) = $24,000 
- Operating income: $145,500 - $24,000 = $121,500 
Therefore, the correct answer is D.

Schrute Farm Sales Buys Portable Generators for $470 and Sells