Decaprio Inc. produces and sells a single product. The company has provided its contribution format income...

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Accounting

Decaprio Inc. produces and sells a single product. The companyhas provided its contribution format income statement for June.
Sales(5,500 units) $ 192,500
Variable expenses 82,500
Contribution margin 110,000
Fixed expenses 86,500
Netoperating income $ 23,500
If the company sells 5,700 units, its net operating incomeshould be closest to: (Do notround intermediate calculations.)

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3.7 Ratings (700 Votes)

Step-1: Calculation of Sale, Variable cost and ccontrbution margin per unit

			Total	Unit Level	Per Unit
			a	b	a/b
	Sales		$ 1,92,500	5500	$ 35.00
	Variable Expense		$ 82,500	5500	$ 15.00
	Contribution Margin		$ 1,10,000	5500	$ 20.00


Step-2:Calculation of Net Operating income at 5.700 units level

		Per Unit	Total
	Sales (5.700 Units)	$ 35.00	$ 1,99,500
	Variable Expense	$ 15.00	$ 85,500
	Contribution Margin	$ 20.00	$ 1,14,000
	Fixed Expense		$ 86,500
	Net Operating Income		$ 27,500

Thus,

	At 5,700 units sold, Net Operating income should be				$ 27,500

Fixed Expense does not change due to change in volume.Variable Expense per unit is remain same.

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Transcribed Image Text

Decaprio Inc. produces and sells a single product. The companyhas provided its contribution format income statement for June.Sales(5,500 units)$192,500Variable expenses82,500Contribution margin110,000Fixed expenses86,500Netoperating income$23,500If the company sells 5,700 units, its net operating incomeshould be closest to: (Do notround intermediate calculations.)


Sales(5,500 units)	$	192,500
Variable expenses		82,500
Contribution margin		110,000
Fixed expenses		86,500
Netoperating income	$	23,500