Problem:
Solo Company is a small merchandising firm. During the next month, the company expects to sell 500 units. The company has the following revenue and cost structure:
Selling price per unit $60
Cost per unit $15
Sales commission 10% of sales
Advertising expense $5,000 per month
Administrative expense $3,000 per month plus 20% of sales
(1) What is the expected gross margin next month?
(2) What is the expected contribution margin next month?
(3) What is the expected total administrative expense next month?
(4) What is the expected net operating income?