Waco Printing Company specializes in printing banners on a high quality, nylon m
ID: 2417675 • Letter: W
Question
Waco Printing Company specializes in printing banners on a high quality, nylon material that can withstand extreme temperatures. The company pays sale personnel a small base salary plus a large commission on each banner sold to encourage a large sales volume.
The following is a summary of the revenue and cost data:
Per Banner
Selling Price $400.00
Variable Costs
Materials $180.00
Sales Commission 80.00
Fixed Costs
Rent $3,200
Advertising 75,000
Sales salaries 3,000
If 600 banners are sold each month, what would be the net operating income?
Explanation / Answer
Computation of net operating income of the Month:
Details Amount in $ Selling price (600 banners * $400 each) 240,000 Less: Variable cost Materials (600 banners * $180 each) (108,000) Sales commission (600 banners * $80 each) (48,000) Contribution ( sales - variable cost) 84,000 Less: Fixed cost Rent (3,200) Advertising (75,000) Sales salaries (3,000) net operating income 2,800Related Questions
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