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