Solution :
As per the information given in the question we have
Monthly Sales = $ 95,000 ; Contribution margin ratio = 56 % = 0.56 ;
Thus the estimated monthly Contribution margin = Monthly Sales * Contribution margin ratio
= $ 95,000 * 0.56
= $ 53,200
The formula for calculating the monthly net operating income is
= Monthly Contribution margin – Monthly fixed expenses
As per the information available we have
Monthly Contribution margin = $ 53,200 ; Monthly Fixed expenses = $ 29,000
Applying the available information in the formula we have monthly net operating income is
= $ 53,200 – 29,000
= $ 24,200
Thus the Net operating income = $ 24,200
The solution is option 3 = $ 24,200
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