Product A has a sales price of $20 per unit. Based on a 12,000-unit production l
ID: 2480209 • Letter: P
Question
Product A has a sales price of $20 per unit. Based on a 12,000-unit production level, the variable costs are $12 per unit and the fixed costs are $7 per unit. Using a flexible budget for 14,500 units, what is the budgeted operating income from Product A?
$84,000.
$78,000.
$50,000.
$14,500.
$32,000
Product A has a sales price of $20 per unit. Based on a 12,000-unit production level, the variable costs are $12 per unit and the fixed costs are $7 per unit. Using a flexible budget for 14,500 units, what is the budgeted operating income from Product A?
Explanation / Answer
Answer: $32,000
Fixed Cost= $7X 12,000=$84,000
Total Fixed Cost will not change till full capacity of operation
Sales in Units
$ 14,500
Sales Price
$ 20
Less : Variable Cost
$ 12
Contribution Per Unit
$ 8
Total Contribution
$ 116,000
Less Fixed Cost
$ 84,000
Operating Income
$ 32,000
Sales in Units
$ 14,500
Sales Price
$ 20
Less : Variable Cost
$ 12
Contribution Per Unit
$ 8
Total Contribution
$ 116,000
Less Fixed Cost
$ 84,000
Operating Income
$ 32,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.