Florek Inc.produces and sells a single product.The company has provided its contribution format income statement for March. If the company sells 5, 900 units, its net operating income should be closest to:

Question

Florek Inc.produces and sells a single product.The company has provided its contribution format income statement for March.  If the company sells 5, 900 units, its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = Sales ÷ Quantity sold
= $228, 000 ÷ 5, 700 units = $40 per unit
Variable expenses per unit = Variable expenses ÷ Quantity sold
= $131, 100 ÷ 5, 700 units = $23 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $40 per unit - $23 per unit = $17 per unit
Profit = (Unit CM × Q)- Fixed expenses
= ($17 per unit × 5, 900 units)- $86, 300 = $100, 300 - $86, 300 = $14, 000