A company’s flexible budget for 12,500 units of production showed sales, $50,000; variable costs, $20,000; and fixed costs, $15,000. The ope

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A company’s flexible budget for 12,500 units of production showed sales, $50,000; variable costs, $20,000; and fixed costs, $15,000. The operating income expected if the company produces and sells 15,000 units is:

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RuslanHeatt 4 years 2021-08-24T14:13:53+00:00 1 Answers 14 views 0

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  1. phucdien
    0
    2021-08-24T14:15:28+00:00
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    Answer: $21000

    Step-by-step explanation:

    First, we calculate the contribution margin which will be:

    =Sales – Variable cost

    = $50,000 – $20,000

    = $30,000

    Therefore, the contribution margin per unit will then be:

    = $30,000 / 12500

    = $2.4 per unit

    The operating income will be the difference between the total contribution margin and the fixed cost. This will be:

    The total Contribution margin will be:

    = $2.4 × 15000

    = $36000

    Fixed costs = $15000

    Operating income = $36000 – $15000

    = $21,000

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