Maack corporation's contribution margin ratio is 18% and its fixed monthly expenses are $52,000. if the company's sales for a month are $315,000, what is the best estimate of the company's net operating income? assume that the fixed monthly expenses do not change. a. $206,300b. $4,700c. $263,000d. $56,700

The company's net operating income is b. $4,700

Explanation:

The contribution margin ratio is calculated by using following formula:

Contribution margin ratio = (Sales - Total Variable cost)/Sales

Total Variable cost = Sales x (1 - Contribution margin ratio)

Maack Corporation's contribution margin ratio is 18% and the company's sales for a month are $315,000.

Total Variable cost = $315,000 x (1 - 18%) = $258,300

The company's net operating income = Sales - Total Variable cost - Fixed expenses = $315,000 - $258,300 - $52,000 = $4,700

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empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

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