Bumpass Corporation's contribution margin ratio is 79% and its fixed monthly expenses are $ 48,000. Assume that the company's sales for July are expected to be $ 107,000.
| Required: |
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Estimate the company's net operating income for July, assuming that the fixed monthly expenses do not change. (Omit the "$" sign in your response.)
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Net operating income
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DeAnne Company produces a single product. The company's variable costing income statement for August appears below:
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De Anne Company
Income Statement
For the month ending August 31 |
| Sales ($24 per unit) |
$988,800 |
| Variable expenses: |
|
| Variable cost of goods sold |
535,600 |
| Variable selling expense |
164,800 |
| Total variable expenses |
700,400 |
| Contribution margin |
288,400 |
| Fixed expenses: |
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| Fixed manufacturing |
140,120 |
| Fixed selling and administrative |
105,090 |
| Total fixed expenses |
245,210 |
| Net operating income |
$ 43,190 |
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The company produced 35,030 units in August and the beginning inventory consisted of 8,690 units. Variable production costs per unit and total fixed costs have remained constant over the past several months.
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Under absorption costing, for the month ended August 31, the company would report a Net operating profit (loss) of:
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$18,510 loss |
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$105,090 profit |
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$18,510 profit |
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$43,190 profit
| DeAnne Company produces a single product. The company's variable costing income statement for August appears below: |
DeAnne Company
Income Staement
For the month ended August 31 |
| Sales ($21 per unit) |
$ 905,100 |
|
|
| Variable expenses: |
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| Variable cost of goods sold |
560,300 |
| Variable selling expense |
129,300 |
| |
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| Total variable expenses |
689,600 |
| |
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| Contribution margin |
215,500 |
| |
|
| Fixed expenses: |
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| Fixed manufacturing |
141,640 |
| Fixed selling and administrative |
35,410 |
| |
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| Total fixed expenses |
177,050 |
| |
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| Net operating income |
$ 38,450 |
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| The company produced 35,410 units in August and the beginning inventory consisted of 8,520 units. Variable production costs per unit and total fixed costs have remained constant over the past several months. |
| Under absorption costing, the ending inventory for the month ended August 31 would be reported at: |
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$10,790 |
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$16,600 |
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$14,110 |
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$21,600 |
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