Question

Green T-Shirt Processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. If they sold 7,000 shirts last quarter and fixed costs totaled $10,000, what is their net operating income?

Answer 1

Answer:

Net operating income= 88,000

Explanation:

Giving the following information:

Selling price= $20

Unitary variable cost= 20*0.3= 6

Fixed costs= $10,000

Units sold= 7,000

We need to calculate the net operating income:

Sales= 20*7,000= 140,000

Variable cost= 6*7,000= (42,000)

Contribution margin= 98,000

Fixed costs= (10,000)

Net operating income= 88,000