Question

Krazy Kayaks sells its

entryminus−level

kayaks for

$ 700.00$700.00

each. Its variable cost is

$ 250.00$250.00

per kayak. Fixed costs are

$ 21 comma 000$21,000

per month for volumes up to

2 comma 0002,000

kayaks. Above

2 comma 0002,000

​kayaks, monthly fixed costs are

$ 54 comma 000$54,000.

What is the budgeted operating income at a level of

700700

kayaks per​ month?

Answer 1

Income Statement
Sales Revenue [700 x $700.00]	490,000
Less: Variable Costs [700 x $250.00]	175,000
Contribution Margin	315,000
Less: Fixed Costs	21,000
Net Operating Income	294,000

“Hence, the budgeted operating income will be $294,000”