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 2,600 sets of speakers per month?
A)Operating loss of $11,000
B)Operating income of $104,000
C)Operating income of $24,000
D)Operating income of $184,000

Question

Quizplus · Accepted Answer

A)
Revenue (# of units × selling price per unit)2,600 × 115 =$299,000
Variable Costs (# of units × variable cost per unit)2,600 × 75 = $195,000
Fixed expenses $115,000
Total expenses 195,000 + 115,000 = 310,000
Operating income 299,000 - 310,000 = (11,000)

Sound Design Sells Its Computer Speakers for $115 Per Set