Sound Design sells its computer speakers for $115 per set.Its variable cost is $75 per set of speakers.Fixed costs are $80,000 per month for volumes up to 2,400 sets of speakers.Above 2,400 sets,monthly fixed costs are $115,000.What is the budgeted operating income (loss)at a sales level of 2,300 sets of speakers per month?
A)Operating loss of $23,000
B)Operating income of $92,000
C)Operating income of $12,000
D)Operating income of $184,500

Question

Quizplus · Accepted Answer

C)
Revenue (# of units × selling price per unit)2,300 × 115 =$264,500
Variable Costs (# of units × variable cost per unit)2,300 × 75 = $172,500
Fixed expenses $80,000
Total expenses 172,500 + 80,000 = $252,500
Operating income 264,500 - 252,500 = $12,000

Sound Design Sells Its Computer Speakers for $115 Per Set