A company's flexible budget for 12,000 units of production showed total contribution margin of $24,000 and fixed costs, $16,000. The operating income expected if the company produces and sells 15,000 units is:

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The contribution margin per unit is $24,000 / 12,000 units = $2 per unit. For 15,000 units, the total contribution margin is 15,000 units * $2 = $30,000. Subtracting fixed costs of $16,000 gives an operating income of $30,000 - $16,000 = $14,000.

A Company's Flexible Budget for 12,000 Units of Production Showed