Question

It costs Homer's Manufacturing $0.65 to produce baseballs and Homer sells them for $5.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $17,000 a month rent for his factory and store, and also pays $78,000 a month to his staff in addition to the commissions. Homer sold 70,500 baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his operating income? $384,050 $352,500 $194,050 $63,450

Answer 1

Correct answer is $194050

Working for your refrence

Computation of Net Income - Home's Manufacturing
Sales Volume		$70,500.00
Sales revenue (70500*$5)		$352,500.00
Less: Variable cost
Cost of goods sold (70500*0.65)	$45,825.00
Sales commission (352500*5%)	$17,625.00	$63,450.00
Contribution margin		$289,050.00
Fixed cost:
Rent expenses	$17,000.00
Salaries expenses	$78,000.00	$95,000.00
Net Operating income		$194,050.00

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