Robusta Coffee Importers sold 7000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. The monthly fixed costs are $8000. Using the contribution income statement format, what is the operating income earned in October

Net operating income= 167,000

Explanation:

Giving the following information:

Robusta Coffee Importers sold 7000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. The monthly fixed costs are $8000.

Under the contribution margin income statement, the structure is as follow:

Sales=

Total variable cost= (-)

=Contribution margin=

Fixed costs= (-)

=Net operating income=

In this case:

Sales= 7,000*45= 315,000

Total variable cost= (7,000*20)= (140,000)

Contribution margin= 175,000

Fixed costs= (8,000)

Net operating income= 167,000

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