The management of Merklin Corporation expects sales in May to be $105,000. The company's contribution margin ratio is 70% and its fixed monthly expenses are $48,000. Required:Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change.
What will be an ideal response?
Profit = (CM ratio × Sales) - Fixed expenses
= (70% × $105,000) - $48,000
= $73,500 - $48,000 = $25,500
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