Contribution Margin and Net Operating Income: ACCT 2302 Unit 2

Exam Review ACCT 2302 Unit 2 (Chapters 6, 7, & 8) 1. Contribution margin is used to: A. First cover fixed expenses, then provide profit B. First provide profit, then cover fixed expenses C. First cover variable expenses, then provide profit D. First provide profit, then cover variable expenses 2. Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. Sales (4,200 units) 155,400 Variable expenses 100,800 Contribution margin 54,600 Fixed expenses 42,400 Net operating income 12,200 If the company sells 4,600 units, its total contribution margin should be closest to: A. $54,600 B. $59,800 C. $69,400 D. $13,362 3. Jilk Inc.'s contribution margin ratio is 58% and its fixed monthly expenses are $36,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $103,000? A. $23,740 B. $59,740 C. $67,000 D. $7,260 4. Coultrap Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) 180,000 Variable expenses 17,000 Contribution margin 53,000 Fixed expenses 48,300 Net operating income 14,700 The contribution margin ratio is closest to: A. 8% B. 35% C. 65% D. 27%