Souza Inc, which produces and sells a single product, has provided its contribution format income statement for October.
Sales (4,000 units)............. $88,00 0
Variable expenses.............. 40,000
Contribution margin.......... 48,000
Fixed expenses................... 41,700
Net operating income......... $ 6,300
1. If the company sells 3,600 units, its total contribution margin should be closest to: A) $39,200 B) $5,670 C) $43,200 D) $48,000
2. If the company sells 3,500 units, its net operating income should be closest to: A) $5,513 B) $6,300 C) $300 D) -$4,700
SOLUTION
Sales (4,000 units)............. $88,00 0
Variable expenses.............. 40,000
Contribution margin.......... 48,000
Fixed expenses................... 41,700
Net operating income......... $ 6,300
1. If the company sells 3,600 units, its total contribution margin should be closest to: A) $39,200 B) $5,670 C) $43,200 D) $48,000
2. If the company sells 3,500 units, its net operating income should be closest to: A) $5,513 B) $6,300 C) $300 D) -$4,700
SOLUTION
