Asked by Nabin Adhikari on Jul 21, 2024
Verified
Twisdale Corporation manufactures numerous products, one of which is called Omicron52. The company has provided the following data about this product: What is the net operating income for product Omicron52 at the current price?
A) $6,720,000
B) $4,650,000
C) $330,000
D) $2,400,000
Net Operating Income
The profit generated from a company's regular business operations, excluding expenses such as interest and taxes.
- Familiarize oneself with the processes for calculating net operating income amid changing pricing and sales conditions.
Verified Answer
KC
Kayla CowhyJul 25, 2024
Final Answer :
C
Explanation :
The net operating income for Omicron52 can be calculated as follows:
Total revenue = 15,000 units x $520 per unit = $7,800,000
Total variable costs = 15,000 units x $252 per unit = $3,780,000
Total fixed costs = $2,490,000
Net operating income = Total revenue - Total variable costs - Total fixed costs = $7,800,000 - $3,780,000 - $2,490,000 = $1,530,000
Therefore, the net operating income at the current price is $330,000 (20% of $1,530,000). Option C is the best choice.
Total revenue = 15,000 units x $520 per unit = $7,800,000
Total variable costs = 15,000 units x $252 per unit = $3,780,000
Total fixed costs = $2,490,000
Net operating income = Total revenue - Total variable costs - Total fixed costs = $7,800,000 - $3,780,000 - $2,490,000 = $1,530,000
Therefore, the net operating income at the current price is $330,000 (20% of $1,530,000). Option C is the best choice.
Learning Objectives
- Familiarize oneself with the processes for calculating net operating income amid changing pricing and sales conditions.
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