Rockwell Corporation manufactures and sells computer keyboards.The keyboard sells for $55 per unit and its variable costs per unit are $42.Fixed costs are $80,000 per month for sales volumes up to 40,000 keyboards.If more than 40,000 keyboards are sold,the fixed costs will be $110,000.The flexible budget would reflect what monthly operating income for a sales volume of 52,000 keyboards?

Question

Quizplus · Accepted Answer

The contribution margin per unit is $55 - $42 = $13. For 52,000 units, the total contribution margin is 52,000 * $13 = $676,000. Since sales exceed 40,000 units, fixed costs are $110,000. Operating income is $676,000 - $110,000 = $566,000.

Rockwell Corporation Manufactures and Sells Computer Keyboards