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Answered

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (6,900 units) $400,200 Variable expenses 262,200 Contribution margin 138,000 Fixed expenses 103,500 Net operating income $34,500 If the company sells 6,800 units, its net operating income should be closest to: (Do not round intermediate calculations.)

Answer :

Anthougogo

If Rovinsky Company sells 6,800 units, its net operating income should be closest to $32,500.

What is a contribution-format income statement?

A contribution format income statement is an income statement that deducts the variable costs from the sales revenue to arrive at the contribution margin.

From the contribution margin, the fixed costs are deducted to arrive at the net operating income or loss.

Data and Calculations:

Rovinsky Corporation

Contribution-format Income Statement

For November 30, 2020

Sales (6,900 units)      $400,200    $58

Variable expenses        262,200       38

Contribution margin      138,000     $20

Fixed expenses            103,500

Net operating income $34,500

Thus, if Rovinsky Company sells 6,800 units, its net operating income should be closest to $32,500 ($20 x 6,800 - $103,500).

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