Jame Company sells glass vases at a wholesale price of $3 per unit. The variable cost of manufacture is $1.75 per unit. The fixed costs are $7,500 per month. Jame sold 5,500 units during this month. Calculate Jame's operating income (loss)for this month.

Question

Quizplus · Accepted Answer

First, let's calculate the total revenue:

Revenue = Selling price per unit x Number of units sold 
Revenue = $3/unit x 5,500 units 
Revenue = $16,500

Next, let's calculate the total variable cost:

Variable cost = Variable cost per unit x Number of units sold 
Variable cost = $1.75/unit x 5,500 units 
Variable cost = $9,625

Now, let's calculate the total cost (fixed cost + variable cost):

Total cost = Fixed cost + Variable cost 
Total cost = $7,500 + $9,625 
Total cost = $17,125

Finally, let's calculate the operating income (revenue - total cost):

Operating income = Revenue - Total cost 
Operating income = $16,500 - $17,125 
Operating income = ($625)

Since the operating income is negative, this means that Jame Company incurred losses of $625 for this month. Therefore, the best choice is C.

Jame Company Sells Glass Vases at a Wholesale Price of $3