ABC Company estimates the following data for the coming month: total variable costs $48,000.00, income tax...
ABC Company estimates the following data for the coming month: total variable costs $48,000.00, income tax rate 30%, total fixed costs $10,000, contribution margin percentage 20%. Find the estimated operating income for the coming month.
a. $2,000
b. $10,000
c. $10,000 X (100%-30%)
d. Between $7,000 and $10,000
Homework Answers
Answer = $2000
Explanation :
Let the sales be X
Then contribution margin will be 0.2X
Now, sales - variable cost = contribution margin
Therefore, X - $48000 = 0.2X
0.8X = $48000
X = $48000/0.8
X = $60000
Operating income calculation:
| Sales | $60000 |
| Less: variable cost | ($48000) |
| Contribution margin | $12000 |
| Less: fixed cost | $10000 |
| Operating income | $2000 |
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