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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 expenses82,500
Contribution margin110,000
Fixed expenses86,500
Netoperating income$23,500

If the company sells 5,700 units, its net operating incomeshould be closest to: (Do notround intermediate calculations.)

Answer & Explanation Solved by verified expert
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.)

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