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Based on a predicted level of production and sales of 16,000 units, a company anticipates total...

Based on a predicted level of production and sales of 16,000 units, a company anticipates total variable costs of $78,400, fixed costs of $27,200, and operating income of $94,080. Based on this information, the budgeted amount of operating income for 13,000 units would be:

Multiple Choice

  • $7,060.

  • $98,540.

  • $162,240.

  • $71,340.

  • $63,700.

Business   Accounting   
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Homework Answers

Answer #1

Sales- Variable cost- Fixed Cost=Operating Income

Sales= Variable cost+ Fixed Cost +Operating Income

Variable cost= $78,400

Fixed Cost=$27,200

Operating income=$94,080

Sales=78,400+27,200+94,080

Sales=199680

Sales per unit=199680/16000

=$12.48 per unit

Sales per unit for 13000 units= 12.48*13000=$162,240

Variable cost per unit for 13000 units=$78400/16000*13000=$63,700

Fixed cost will remain same= $27,200

Operating income for 13000 units= 162,240-63,700-27,200

=$71,340

Option 4 is correct.

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