Answer: The Net Operating Income (NOI) is $49,000
Explanation: The formula for calculating Net Operating Income is given as:
NOI = RR - OE
Where:
RR = Real estate Revenue.
OE = Operating Expenses.
From the question above, we can calculate the RR by multiplying the total units by the price of one unit, thus:
RR = 5,000 X $25
RR = $125,000
To calculate the OE, we will add all the expenses incurred by the corporation, thus:
Production costs = 5,000 units X 10 = $50,000.
Monthly utility expenses = $2,000 + ($2 X 5000 units)
= $2,000 + $10,000 = $12,000.
Selling expenses = $12,000.
Monthly rent = $2,000.
Therefore total OE = $50,000 + $12,000 + $12,000 + $2,000
OE = $76,000.
Having gotten the RR and OE, we can now calculate for NOI thus:
NOI = RR - OE
NOI = $125,000 - $76,000
NOI = $49,000.
Answer:
$49,000
Explanation:
Net operating income (NOI) is usually used in real estate, since it doesn't take in account all the production costs, but it can also work for manufacturing firms (like this one) that do not have depreciation or amortization costs.
NOI = total revenue - operating expenses
total revenue = 5,000 x $25 = $125,000
operating expenses = production costs (5,000 x $10) + utilities ($2,000 + 5,000x$2) + selling expenses ($12,000) + rent ($2,000) = $50,000 + ($2,000 + $10,000) + $12,000 + $2,000 = $76,000
net operating expenses = $125,000 - $76,000 = $49,000
