Summer Nights sells bottles of bug spray for $9.5 each. Variable costs are $3 pe

Question

Summer Nights sells bottles of bug spray for $9.5 each. Variable costs are $3 per bottle, while fixed costs are $39,000 per month for volumes up to 40.000 bottles of spray and $53,000 per month for volumes above 40,000 bottles of spray. The flexible budget would reflect monthly operating income for 23,000 bottles of spray and 25,000 bottles of spray of what dollar amounts? $218,500 and $237,500, respectively $96,500 and $184,500, respectively $110,500 and $123,500. respectively $179,500 and $123,500 respectively

Explanation / Answer

c $110500 and $123500, respectively

23000 bottles 25000 bottles

sales 23000*$9.5 = 218500 25000*$9.5=237500

less: variable cost 23000*$3 = 69000 25000 *$3 = 75000

contribution margin $149500 $162500

less: fixed cost $39000 $39000

Operating Income   110500 123500

Note:- Fixed cost for all the unit of bottles remain same till the volume of production of 40000 bottles

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