Sound Design sells its computer speakers for $135 per set. Its variable cost is $85 per set of speakers. Fixed costs are $85,000 per month for volumes up to 2600 sets of speakers. Above 2600 sets, monthly fixed costs are $126,000. What is the budgeted operating income (loss)at a sales level of 2200 sets of speakers per month?
A)Operating loss of $16,000
B)Operating income of $110,000
C)Operating income of $25,000
D)Operating income of $212,000

Question

Quizplus · Accepted Answer

Operating income can be calculated using the formula: Operating Income = (Selling Price per Unit - Variable Cost per Unit) * Number of Units Sold - Fixed Costs. For 2200 sets, the calculation is: ($135 - $85) * 2200 - $85,000 = $25,000.

Sound Design Sells Its Computer Speakers for $135 Per Set