Super Corporation manufactures two products,Super1 and Super2.The following annual information was gathered: Total annual fixed costs are $25,000.Assume Super Corporation manufactures and sells three units of Super1 for every two units of Super2.The company produced and sold 1,500 units of Super1.What is the operating income (loss)for this year?

Question

Super Corporation manufactures two products,Super1 and Super2.The following annual information was gathered:  Total annual fixed costs are $25,000.Assume Super Corporation manufactures and sells three units of Super1 for every two units of Super2.The company produced and sold 1,500 units of Super1.What is the operating income (loss)for this year?

Quizplus · Accepted Answer

First, we need to find out how many units of Super2 were produced and sold. Since three units of Super1 are sold for every two units of Super2, we can set up the following equation:

3(1500) = 2x
4500 = 2x
x = 2250

So, 2250 units of Super2 were produced and sold.

Next, we need to calculate the total revenue from the sale of both products. Since Super1 sells for $50 per unit and Super2 sells for $30 per unit, we can calculate the total revenue as follows:

1500($50) + 2250($30) = $127,500

Now we can calculate the total variable costs for producing and selling both products. Since Super1 has a variable cost of $25 per unit and Super2 has a variable cost of $20 per unit, we can calculate the total variable costs as follows:

1500($25) + 2250($20) = $87,500

To calculate the operating income (loss), we can subtract the total revenue from the total variable costs and the total fixed costs:

$127,500 - $87,500 - $25,000 = -$13,500

So, the operating income (loss) for the year is $(13,500), which means that the correct answer is A.

Super Corporation Manufactures Two Products,Super1 and Super2