Ofarrell Corporation,a company that produces and sells a single product,has provided its contribution format income statement for March. If the company sells 5,400 units,its net operating income should be closest to:

Question

Ofarrell Corporation,a company that produces and sells a single product,has provided its contribution format income statement for March.  If the company sells 5,400 units,its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = Sales ÷ Quantity sold
= $205,000 ÷ 5,000 units = $41 per unit
Variable expenses per unit = Variable expenses ÷ Quantity sold
= $125,000 ÷ 5,000 units = $25 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $41 per unit - $25 per unit = $16 per unit
Profit = (Unit CM × Q)- Fixed expenses
= ($16 per unit × 5,400 units)- $62,400 = $86,400 - $62,400 = $24,000

Ofarrell Corporation,a Company That Produces and Sells a Single Product,has