Dimitrov Corporation, a company that produces and sells a single product, has provided its contribution format income statement for July.

Sales (6,800 units) $401,200

Variable expenses 265,200

Contribution margin 136,000

Fixed expenses 103,500

Net operating income $32,500

If the company sells 6,700 units, its net operating income should be closest to:

a. $31,979

b. $32,500

c. $28,000

d. $30,500

Question

Braiden

Business

3 October, 18:03

Dimitrov Corporation, a company that produces and sells a single product, has provided its contribution format income statement for July.

Sales (6,800 units) $401,200

Variable expenses 265,200

Contribution margin 136,000

Fixed expenses 103,500

Net operating income $32,500

If the company sells 6,700 units, its net operating income should be closest to:

a. $31,979

b. $32,500

c. $28,000

d. $30,500

+3

Answers (1)

Know the Answer?

Magdalena Collier · Answer 1

Option (d) is correct.

Explanation:

Contribution margin per unit:

= Contribution margin : No. of units sold

= 136,000 : 6,800

= $20 per unit

If the company sells 6,700 units, then

Net operating income:

= Contribution margin - Fixed expenses

= (6,700 units * $20 per unit) - $103,500

= $134,000 - $103,500

= $30,500

Therefore, the net operating income of this company is closest to $30,500.