Grisham Corporation produces and sells a single product.The company has provided its contribution format income statement for February. If the company sells 5,700 units,its net operating income should be closest to:

Question

Grisham Corporation produces and sells a single product.The company has provided its contribution format income statement for February.  If the company sells 5,700 units,its net operating income should be closest to:

Quizplus · Accepted Answer

Selling price per unit = $358,400 ÷ 5,600 units = $64 per unit
Variable expense per unit = $229,600 ÷ 5,600 units = $41 per unit
Unit CM = $64 per unit - $41 per unit = $23 per unit
Profit = (Unit CM × Q)- Fixed expenses
= ($23 per unit × 5,700 units)- $108,400 = $131,100 - $108,400 = $22,700

Grisham Corporation Produces and Sells a Single Product