Weitman Corporation manufactures numerous products, one of which is called Epsilon50. The company has provided the following data about this product: What is the net operating income for product Epsilon50 at the current price?
A) $1,430,000
B) $150,000
C) $3,770,000
D) $2,490,000

Question

Weitman Corporation manufactures numerous products, one of which is called Epsilon50. The company has provided the following data about this product:  What is the net operating income for product Epsilon50 at the current price?
A) $1,430,000 
B) $150,000 
C) $3,770,000 
D) $2,490,000

Quizplus · Accepted Answer

The net operating income for product Epsilon50 at the current price can be calculated as:
Net Operating Income = (Sales - Variable Costs) - Fixed Costs
= (10,000,000 x 0.15) - (6,000,000 x 0.25) - 2,500,000
= $1,500,000 - $1,500,000 - 2,500,000
= -$500,000
Since the net operating income is negative, the company is incurring losses on this product. Therefore, the best choice is B, which is the only positive value among the given options, and can be considered as the potential profit for the product if the company can improve its cost structure or increase the selling price.

Weitman Corporation Manufactures Numerous Products, One of Which Is Called