Question

can produce two types of light fixtures, the indoors model and the outdoors model. if the total sales are expected to be 21,050 units, what would be the totla operating income of the company if it decides to buy the new production equipment

Answer 1

$1,000,000

Step-by-step explanation:

The computation is shown below:

Particulars Indoors Model Outdoors Model Total

No of Units

(21,050 in ratio 2:3) 8,420 12,630 21,050

Sales 1,263,000 2,778,600 4,041,600

Less: Variable costs 168,400 505,200 673,600

Contribution margin 1,094,600 2,273,400 3,368,000

Less: Fixed costs

(2,160,000 + 208,000) 2,368,000

Operating Income 1,000,000