Question

This Quiz: 0 pts poss Sound Design seisis computer speskers for $125.00 per sett variable costs $75.00 per set of speakers. Fixed core 300 000 per month for volumes up to 2.700 sets of 5143,000. What is the budged operating income sales level of 2.800 sets of speakers per month? hers. Above 2.700 sets, monthly fed costs are O A Operating income of $140,000 OB. Operating income of $207,000 OC. Operating income of $50.000 OD. Operating loss of $3.000

Answer 1

Answer)

Calculation of operating Income

Particulars	Total
Sales ($ 125 per set X 2,800 sets)	$ 350,000
Variable Cost ($ 75 per set X 2,800 sets)	$210,000
Contribution Margin	$ 140,000
Total Fixed Cost	$ 143,000
Operating Income	-3000

The total operating loss is $ 3000. Therefore the correct option is Option (D)

Note on Fixed Cost: The fixed cost in the given question is a based on the level of production. It will be $ 90,000 per month upto 2,700 sets and will increase to $ 143,000 as the level of sales increases beyond 2,700. Since the question required the operating income at 2,800 units, we have considered the fixed cost to be $ 143,000.