Robusta Coffee Importers sold 7000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. The monthly fixed costs are $8000. Using the contribution income statement format, what is the operating income earned in October

Net operating income = 167,000

Explanation:

Giving the following information:

Robusta Coffee Importers sold 7000 units in October at a sales price of $45 per unit. The variable cost is $20 per unit. The monthly fixed costs are $8000.

Under the contribution margin income statement, the structure is as follow:

Sales=

Total variable cost = (-)

=Contribution margin=

Fixed costs = (-)

=Net operating income=

In this case:

Sales = 7,000*45 = 315,000

Total variable cost = (7,000*20) = (140,000)

Contribution margin = 175,000

Fixed costs = (8,000)

Net operating income = 167,000