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25 July, 12:05

Bolding Inc.'s contribution margin ratio is 61% and its fixed monthly expenses are $42,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $126,000

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  1. 25 July, 12:22
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    The correct answer is $34,860.

    Explanation:

    According to the scenario, the given data are as follows:

    Sales = $126,000

    Fixed monthly expense = $42,000

    Contribution margin ratio = 61%

    So, contribution margin amount = $126,000 * 61%

    = $76,860

    So, we can calculate the net operating income by using following formula:

    Net operating income = contribution margin amount - Fixed monthly expense

    = $76,860 - $42,000

    = $34,860
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