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1 March, 00:23

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. If the company sells 5,300 units, its net operating income should be closest to: Select one: a. $24,600 b. $2,200 c. $22,874 d. $15,400 Previous page

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  1. 1 March, 00:47
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    The question is incomplete, I found a possible match to the complete question:

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

    sales (5,700 units) $ 319,200

    Variable expenses 188,100

    Contribution margin 131,100

    Fixed expenses 106,500

    Net operating income $ 24,600

    If the company sells 5,300 units, its net operating income should be closest to:

    a. $24,600

    b. $2,200

    c. $22,874

    d. $15,400

    The correct answer is:

    $15,400 (d.)

    Explanation:

    In order to solve this, we have to find the unit sales for the product, then use that to calculate for the required 5,300 units. This is done as follows:

    we are given that:

    5,700 units = 319,200

    ∴ 1 unit = 319,200 : 5,700 = $56

    ∴ sales = $56 per unit

    Hence 5,300 units = 56 * 5300 = $296,800

    For the variable expenses:

    5,700 units = $188,100

    ∴ 1 unit = 188,100 : 5700 = $33

    ∴ 5,300 units = 33 * 5300 = $174,900

    Fixed expenses = $106,500 (remains the same irrespective of number of units)

    Now let us calculate the net operating income as follows:

    Net operating income = Sales - variable expenses - fixed expenses

    Net operating income = 296,800 - 174,900 - 106,500 = $15,400

    Therefore if 5,300 units are sold, net operating income = $15,400
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