Schrute Farm Sales buys portable generators for $470 and sells them for $720 He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $7,000 a month rent for his store, and also pays $1,700 a month to his staff in addition to the commissions. Mr. Schrute sold 500 generators in June. If Mr. Schrute prepares a contribution margin income statement for the month of June, what would be his operating income? O A. $98,300 OB. $360.000 OC. $115,700 OD. $253.000

The correct answer is A.

Explanation:

Giving the following information:

Schrute Farm Sales buys portable generators for $470 and sells them for $720 He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $7,000 a month rent for his store and also pays $1,700 a month to his staff in addition to the commissions. Mr. Schrute sold 500 generators in June.

Revenue = 720*500 = $360,000

Cost of goods sold = 470*500 = 235,000 (-)

Sales commision = 0.05*360,000 = 18,000 (-)

Contribution Margin = 107,000

Rent = 7,000 (-)

Fixed sales comission = 1,700 (-)

Operating income = $98,300