Question

Jilk Inc.'s contribution margin ratio is 62% and its fixed monthly expenses are $46,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $135,000?

Answer 1

Answer:

$37,200

Explanation:

The computation of the best estimate of the company net operating income is shown below:

As we know that

Profit = (Contribution margin ratio × Sales) - Fixed monthly Expenses

= (0.62 × $135,000) - $46,500

= $83,700 - $46,500

= $37,200

We simply applied the above formula so that the best estimate of the company net operating income could come