Green T-Shirt Processing has a unit sales price of $20 for their t-shirt. The contribution margin percentage is 70%. If they sold 7,000 shirts last quarter and fixed costs totaled $10,000, what is their net operating income?

Net operating income = 88,000

Explanation:

Giving the following information:

Selling price = $20

Unitary variable cost = 20*0.3 = 6

Fixed costs = $10,000

Units sold = 7,000

We need to calculate the net operating income:

Sales = 20*7,000 = 140,000

Variable cost = 6*7,000 = (42,000)

Contribution margin = 98,000

Fixed costs = (10,000)

Net operating income = 88,000