Tina Industries manufactures a product whose variable costs are 62.5% of sales.Tina's tax rate is 35% and net income for the year was $33,696.If Tina sold 23,040 units at $16 per unit, what were the company's operating income and fixed costs (round your answer if necessary)?

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Quizplus · Accepted Answer

Operating income is calculated as Sales - Variable Costs - Fixed Costs. Given that variable costs are 62.5% of sales, the variable cost per unit is 62.5% of $16, which equals $10. Therefore, the total variable cost is $10 * 23,040 units = $230,400. Sales are 23,040 units * $16 = $368,640. To find operating income, we need to adjust net income for taxes: $33,696 / (1 - 0.35) = $51,840. To find fixed costs, we subtract variable costs and operating income from sales: $368,640 - $230,400 - $51,840 = $86,400.

Tina Industries Manufactures a Product Whose Variable Costs Are 62