Question

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November Sales (7,200 units) Variable expenses Contribution margin Fixed expenses Net operating income $338,400 194,400 144,000 103,500 $ 40, 500 If the company sells 7,100 units, its net operating Income should be closest to: (Do not round Intermediate calculations.)

Answer 1

Answer is $38,500

Sales = $338,400

Number of units sold = 7,200

​​​​​​Sales = Number of units sold * Selling Price per unit

Selling price per unit = Sales / Number of units sold

Selling price per unit = $338,400 /7,200

= $47

Variable Expenses = $194,400

Variable Expenses per unit = Variable Expenses / Number of units sold

= $194,400 /7,200

= $27

Now, If 7,100 units are sold

Sales = Number of Units Sold * selling price per unit

= 7,100 * $47

= $333,700

Variable Expenses = Number of units sold * Variable Expenses per unit

= 7,100 * $27

= $191,700

So,Net operating income will be $38,500

Sales	$333,700
Less Variable Expenses	($191,700)
Contribution Margin	$142,000
Less Fixed Expenses	($103,500)
Net Operating Income	$38,500

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