Branson Movies sells movie tickets for $13 per movie patron. Variable costs are $8 per movie patron and fixed costs are $60,000 per month. The company's relevant range extends to 35,000 movie patrons per month. What is Branson's projected operating income if 28,000 movie patrons see movies during a month?

Question

Quizplus · Accepted Answer

Operating income is calculated as (Sales - Variable Costs - Fixed Costs). For 28,000 patrons: Sales = 28,000 * $13 = $364,000; Variable Costs = 28,000 * $8 = $224,000; Fixed Costs = $60,000. Operating Income = $364,000 - $224,000 - $60,000 = $80,000.

Branson Movies Sells Movie Tickets for $13 Per Movie Patron