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Finding Budgeted Net Operating Income

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Jilk Ink's contribution margin ratio is 58% and its fixed monthly expenses are $36,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's NET OPERATING INCOME in a month when sales are $103,000?
A)$23,740
B)$59,740
C)$67,000
D)$7,260

Wilson Company prepared the following preliminary budget assuming no advertising expenditures:
Selling price..............$10 per unit
Unit sales.................100,000
Variable expenses..........$600,000
Fixed expenses.............$300,000

Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted NET OPERATING INCOME?
A) $175,000
B) $190,000
C) $205,000
D) $365,000

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This solution provides calculations for budgeted net operating income in Excel.

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