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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:

Estimate the company's net operating income for July, assuming that the fixed monthly expenses do not change. (Omit the "$" sign in your response.)

Net operating income

DeAnne Company produces a single product. The company's variable costing income statement for August appears below:
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:
  Fixed manufacturing 140,120
  Fixed selling and administrative 105,090
  Total fixed expenses 245,210
  Net operating income $ 43,190

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.

Under absorption costing, for the month ended August 31, the company would report a Net operating profit (loss) of:

$18,510 loss

$105,090 profit

$18,510 profit

$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:
  Variable cost of goods sold 560,300
  Variable selling expense 129,300
  
  Total variable expenses 689,600
  
  Contribution margin 215,500
  
  Fixed expenses:
  Fixed manufacturing 141,640
  Fixed selling and administrative 35,410
  
  Total fixed expenses 177,050
    
  Net operating income $ 38,450


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:

$10,790

$16,600

$14,110

$21,600

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9953167

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