Bowe Corporation\'s fixed monthly expenses are $25,000 and its contribution marg

Question

Bowe Corporation's fixed monthly expenses are $25,000 and its contribution margin ratio is 67%. 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 $82,000? Cabal Products is a division of a major corporation. Last year the division had total sales of $12,880,000, net operating income of $837,200, and average operating assets of $2,833,600. The company's minimum required rate of return is 16%. The division's return on investment (ROI) is closest to:

Explanation / Answer

Profit = Contribution margin - Fixed expenses

Contribution margin = Sales*Contribution margin ratio

= $82,000*67/100

= $54,940 .

Profit = $54,940 - $25,000

= $29,940

Therefore, option C is correct.

Note: Please post one question in a post.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.