Twisdale Corporation manufactures numerous products, one of which is called Omicron52. The company has provided the following data about this product: What is the net operating income for product Omicron52 at the current price?
A) $6,720,000
B) $4,650,000
C) $330,000
D) $2,400,000

Question

Twisdale Corporation manufactures numerous products, one of which is called Omicron52. The company has provided the following data about this product:  What is the net operating income for product Omicron52 at the current price?
A) $6,720,000 
B) $4,650,000 
C) $330,000 
D) $2,400,000

Quizplus · Accepted Answer

The net operating income for Omicron52 can be calculated as follows:
Total revenue = 15,000 units x $520 per unit = $7,800,000
Total variable costs = 15,000 units x $252 per unit = $3,780,000
Total fixed costs = $2,490,000
Net operating income = Total revenue - Total variable costs - Total fixed costs = $7,800,000 - $3,780,000 - $2,490,000 = $1,530,000
Therefore, the net operating income at the current price is $330,000 (20% of $1,530,000). Option C is the best choice.

Twisdale Corporation Manufactures Numerous Products, One of Which Is Called