Sammis Inc, which produces and sells a single product, has provided its contribution format income statement for January. If the company sells 2, 500 units, its net operating income should be closest to:

Question

Sammis Inc, which produces and sells a single product, has provided its contribution format income statement for January.  If the company sells 2, 500 units, its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = $226, 200 ÷ 2, 900 units = $78 per unit
Variable expense per unit = $95, 700 ÷ 2, 900 units = $33 per unit
Unit CM = $78 per unit - $33 per unit = $45 per unit
Profit = (Unit CM × Q)- Fixed expenses
= ($45 per unit × 2, 500 units)- $95, 600 = $112, 500 - $95, 600 = $16, 900

Sammis Inc, Which Produces and Sells a Single Product, Has