The management of Pacubas Corporation expects sales in July to be $121,000. The company's contribution margin ratio is 64% and its fixed monthly expenses are $40,000. Required: Estimate the company's net operating income for July, assuming that the fixed monthly expenses do not change.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The management of Pacubas Corporation expects sales in July to be $121,000. The company's contribution margin ratio is 64% and its fixed monthly expenses are $40,000.
Required:
Estimate the company's net operating income for July, assuming that the fixed monthly expenses do not change.
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