Answer the following question(s)using the information below.Cool Air Ltd.manufactures only one type of air conditioner and has two divisions, the Compressor Division, and the Assembly Division.The Compressor Division manufactures compressors for the Assembly Division, which completes the air conditioner and sells them to retailers.The Compressor Division "sells" compressors to the Assembly Division.The market price for the Assembly Division to purchase a compressor is $77.(Ignore changes in inventory.)The fixed costs for the Compressor Division are assumed to be the same over the range of 5,000-10,000 units.The fixed costs for the Assembly Division are assumed to be $15.00 per unit at 10,000 units.Compressor's costs per compressor are:
Assembly's costs per completed air conditioner are:

-If the Assembly Division sells 1,000 air conditioners at a price of $750.00 per air conditioner to customers, what is the company's operating income?
A)$200,500
B)$207,000
C)$194,000
D)$165,750
E)$230,500

Question

Answer the following question(s)using the information below.Cool Air Ltd.manufactures only one type of air conditioner and has two divisions, the Compressor Division, and the Assembly Division.The Compressor Division manufactures compressors for the Assembly Division, which completes the air conditioner and sells them to retailers.The Compressor Division "sells" compressors to the Assembly Division.The market price for the Assembly Division to purchase a compressor is $77.(Ignore changes in inventory.)The fixed costs for the Compressor Division are assumed to be the same over the range of 5,000-10,000 units.The fixed costs for the Assembly Division are assumed to be $15.00 per unit at 10,000 units.Compressor's costs per compressor are:
  Assembly's costs per completed air conditioner are:
 
-If the Assembly Division sells 1,000 air conditioners at a price of $750.00 per air conditioner to customers, what is the company's operating income?
A)$200,500 
B)$207,000 
C)$194,000 
D)$165,750 
E)$230,500

Quizplus · Accepted Answer

The operating income is calculated by subtracting the cost of goods sold from the sales revenue. The cost of goods sold is given as $549.50 per air conditioner, so the total cost of goods sold for 1,000 air conditioners is $549.50 * 1,000 = $549,500. The sales revenue is given as $750.00 per air conditioner, so the total sales revenue for 1,000 air conditioners is $750.00 * 1,000 = $750,000. Therefore, the operating income is $750,000 - $549,500 = $200,500.

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