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6 January, 09:42

Robusta Coffee Importers sold 7000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. The monthly fixed costs are $8000. Using the contribution income statement format, what is the operating income earned in October

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  1. 6 January, 10:11
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    Net operating income = 167,000

    Explanation:

    Giving the following information:

    Robusta Coffee Importers sold 7000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. The monthly fixed costs are $8000.

    Under the contribution margin income statement, the structure is as follow:

    Sales=

    Total variable cost = (-)

    =Contribution margin=

    Fixed costs = (-)

    =Net operating income=

    In this case:

    Sales = 7,000*45 = 315,000

    Total variable cost = (7,000*20) = (140,000)

    Contribution margin = 175,000

    Fixed costs = (8,000)

    Net operating income = 167,000
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