Summer Nights sells bottles of bug spray for $6.50 each. Variable costs are $3.0

Question

Summer Nights sells bottles of bug spray for $6.50 each. Variable costs are $3.00 per bottle, while fixed costs are $44,000 per month for volumes up to 30,000 bottles of spray and $54,000 per month for volumes above 30,000 bottles of spray. The flexible budget would reflect monthly operating income for 19,000 bottles of spray and 24,000 bottles of spray of what dollar amounts? 0 A. $22,500 and $40,000, respectively 0 B. $123,500 and $156,000, respectively C. $79,500 and $40,000, respectively D. $12,500 and $102,000, respectively

Explanation / Answer

The correct answer is A. $ 22,500 and $ 40,000 , respectively

Selling Price Per Unit 6.5 Less : variable cost per unit 3 Contribution Margin per Unit 3.5 Units 19,000 24,000 Contribution Margin per Unit 3.50 3.50 Contribution Margin (Units * Per Unit) 66,500 84,000 Less : Fixed Cost 44,000 44,000 Operating Income 22,500 40,000

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