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    mujer's Avatar
    mujer Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Aug 12, 2012, 05:49 PM
    calculating net operating income
    here's the problem
    the management of reagon corporation expects sales in January to be $ 122,000 the contribution margin ratio is 69% and its fixed monthly expenses are $ 50,000
    I need to figure out
    Estimate the company's net income for January assuming that fixed monthly expenses do not change

    I know the formula is total sales- total variable costs-fixed costs
    but I can't figure out the variable costs
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
    Ultra Member
    		  
    #2

    Aug 12, 2012, 06:11 PM
    what fooled by a different description? Variable expenses are those which are in proportion to volume

    so sales*contribution margin-fixed expenses is the same as your equation in this example
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