knowledge check 01 khan corporation has budgeted the unit sales for april to be 5,000 units. the sales price is $25 per unit, and production costs are $10 per unit. monthly utility expenses are estimated to be $2,000 plus $2 per unit, whereas selling expenses are estimated to be $12,000. the company pays a monthly rent of $2,000. what is the net operating income in the company's planning budget? multiple choice $49,000 $62,000 $125,000 $72,000

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27-10-2022
Business

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knowledge check 01 khan corporation has budgeted the unit sales for april to be 5,000 units. the sales price is $25 per unit, and production costs are $10 per unit. monthly utility expenses are estimated to be $2,000 plus $2 per unit, whereas selling expenses are estimated to be $12,000. the company pays a monthly rent of $2,000. what is the net operating income in the company's planning budget? multiple choice $49,000 $62,000 $125,000 $72,000

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tutorconsortium204 tutorconsortium204 · Answer 1 · 2022-10-31T16:45:17-04:00

EBIT is $49,000 is the correct option of the given statement.

Net operating income is the income that a company left with after paying for fixed and variable expenses. It is sometimes denoted as EBIT, earnings before interest and tax.

EBIT = Sales - ( fixed expense + variable expenses )

sales = 5,000 * $25 = $125,000

variable expense = 5,000 *( $10 + $2 ) = $60,000

fixed expenses = $2000 + $12000 + $2000 = $16,000

so,

EBIT = $125,000 - ( $16,000 + $60,000 )

= $49,000

What is EBIT?

Earnings before interest and taxes (EBIT), a metric used in accounting and finance to assess a company's profitability, takes into account all operational and non-operating revenues and costs with the exception of interest and income tax costs.

EBIT: Why Is It Important?

An essential indicator of a company's operational effectiveness is EBIT. It displays the amount of revenue generated by the company's core operations without accounting for indirect costs like taxes and interest on outstanding debt.

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