Bowe Corporation\'s fixed monthly expenses are $22,500 and its contribution marg

Question

Bowe Corporation's fixed monthly expenses are $22,500 and its contribution margin ratio is 62%. 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 $77,000?

$6,760

$54,500

$47,740

$25,240

Bowe Corporation's fixed monthly expenses are $22,500 and its contribution margin ratio is 62%. 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 $77,000?

Explanation / Answer

$25,240

net operating income=sales $77,000*contribution margin ratio is 62%-fixed monthly expenses $22,500=$25,240

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