Luna sells custom water bottles for $20 per bottle. The Variable Cost for each bottle she sells is $5. She also has Fixed Costs of $2,000. 




If Luna sells 200 water bottles, what is her total Contribution Margin? __________ And what is her total Net Operating Income? __________

To calculate Luna's total **Contribution Margin** and **Net Operating Income**, we need to break down the problem.

### Given:
- Selling price per bottle = $20
- Variable cost per bottle = $5
- Fixed costs = $2,000
- Number of bottles sold = 200

### 1. **Contribution Margin per bottle**:
\[
\text{Contribution Margin per bottle} = \text{Selling price} - \text{Variable cost} = 20 - 5 = 15
\]

### 2. **Total Contribution Margin**:
The total contribution margin is the contribution margin per bottle multiplied by the number of bottles sold.
\[
\text{Total Contribution Margin} = 15 \times 200 = 3,000
\]

### 3. **Net Operating Income**:
The Net Operating Income is the total contribution margin minus the fixed costs.
\[
\text{Net Operating Income} = \text{Total Contribution Margin} - \text{Fixed Costs} = 3,000 - 2,000 = 1,000
\]

### Final Answer:
- Total **Contribution Margin** = **$3,000**
- Total **Net Operating Income** = **$1,000**

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Would you like any details on how I reached these numbers? 

Here are some related questions:
1. What happens to the Net Operating Income if Luna sells 300 bottles?
2. What is the break-even point in terms of units sold?
3. How would a price increase to $25 per bottle affect the Contribution Margin?
4. If the Variable Cost increased to $7, how would it affect her Net Operating Income?
5. What if her fixed costs increased to $3,000, how would that affect her profits?

**Tip:** Keeping an eye on your Contribution Margin helps in pricing strategies and profitability planning.

Luna sells custom water bottles for $20 per bottle. The Variable Cost for each bottle she sells is $5. She also has Fixed Costs of $2,000. If Luna sells 200 water bottles, what is her total Contribution Margin? And what is her total Net Operating Income?

Find out how to calculate the total contribution margin and net operating income for Luna's custom water bottles. With a selling price of $20 per bottle, variable cost of $5, and fixed costs of $2,000, this example walks you through the calculations step-by-step. Ideal for Grades 9-12.

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