calculate the net operating income ,
evergreen corp has provided the following data:
sales per period 1000 units ,selling price $ 40 per unit , variable manufacturing cost 12 per unit, selling expenses $5,100 pls 5% of selling price , administrative expenses $3,000 plus 20% of selling price
To calculate the net operating income for Evergreen Corp, we need to determine the total revenues and the total expenses.
First, let's calculate the total revenues:
Total Sales Revenue = Sales per Period × Selling Price per Unit
Total Sales Revenue = 1000 units × $40 per unit
Total Sales Revenue = $40,000
Next, let's calculate the total variable manufacturing cost:
Total Variable Manufacturing Cost = Variable Manufacturing Cost per Unit × Sales per Period
Total Variable Manufacturing Cost = $12 per unit × 1000 units
Total Variable Manufacturing Cost = $12,000
Now, let's calculate the total selling expenses:
Total Selling Expenses = Fixed Selling Expenses + Variable Selling Expenses
Fixed Selling Expenses = Selling Expenses (given as $5,100)
Variable Selling Expenses = 5% of Selling Price × Total Sales Revenue
Variable Selling Expenses = 0.05 × $40,000
Variable Selling Expenses = $2,000
Total Selling Expenses = $5,100 + $2,000
Total Selling Expenses = $7,100
Similarly, let's calculate the total administrative expenses:
Total Administrative Expenses = Fixed Administrative Expenses + Variable Administrative Expenses
Fixed Administrative Expenses = Administrative Expenses (given as $3,000)
Variable Administrative Expenses = 20% of Selling Price × Total Sales Revenue
Variable Administrative Expenses = 0.2 × $40,000
Variable Administrative Expenses = $8,000
Total Administrative Expenses = $3,000 + $8,000
Total Administrative Expenses = $11,000
Now, we can calculate the net operating income:
Net Operating Income = Total Revenues - Total Expenses
Total Expenses = Total Variable Manufacturing Cost + Total Selling Expenses + Total Administrative Expenses
Total Expenses = $12,000 + $7,100 + $11,000
Total Expenses = $30,100
Net Operating Income = $40,000 - $30,100
Net Operating Income = $9,900
Therefore, the net operating income for Evergreen Corp is $9,900.