Contento Corporation manufactures numerous products, one of which is called Kappa15. The company has provided the following data about this product: What is the net operating income for product Kappa15 at the current price?
A) $4,800,000
B) $13,600,000
C) $260,000
D) $9,060,000

Question

Contento Corporation manufactures numerous products, one of which is called Kappa15. The company has provided the following data about this product:  What is the net operating income for product Kappa15 at the current price?
A) $4,800,000 
B) $13,600,000 
C) $260,000 
D) $9,060,000

Quizplus · Accepted Answer

The net operating income for product Kappa15 can be calculated as follows:
Sales revenue ($40/unit x 100,000 units) = $4,000,000
Variable costs ($21/unit x 100,000 units) = $2,100,000
Fixed costs = $1,640,000
Net operating income = Sales revenue - Variable costs - Fixed costs
Net operating income = $4,000,000 - $2,100,000 - $1,640,000
Net operating income = $260,000
Therefore, option C is the correct answer.

Contento Corporation Manufactures Numerous Products, One of Which Is Called