Bowe Corporation's Fixed Monthly Expenses Are $21,000 and Its Contribution

question 121

Multiple Choice

Bowe Corporation's fixed monthly expenses are $21,000 and its contribution margin ratio is 61%. 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 $74,000?

• A)$7,860
• B)$45,140
• C)$24,140
• D)$53,000

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Definitions:

Total Assets

Refers to the sum of everything of value owned by a business, including cash, securities, receivables, inventories, and fixed assets.

Sources of Cash

Various origins from which a business or individual receives money, including operations, financing, and investing activities.

Accounts Payable

Money owed by a company to its creditors or suppliers for products or services that have been delivered but not yet paid for.

Fixed Assets

These are long-term tangible assets that a firm owns and uses in its operations to generate income, such as buildings, machinery, and equipment, which are not expected to be consumed or converted into cash within a year.