Question

Summer Nights sells bottles of bug spray for 9$ each. Variable costs are 3.50$ per​ bottle, while fixed costs are 40,000$ per month for volumes up to 50,000$ bottles of spray and 60,000$ per month for volumes above 50,000 bottles of spray. The flexible budget would reflect monthly operating income for 14,000 bottles of spray and 29,000 bottles of spray of what dollar​ amounts?

A 37000 and 119500 respectively
B 86000 and 119500 respectively
C 17000 and 201000 respectively
D 126000 and 261000 respectively

Answer 1

The monthly operating income for 14,000 bottles of spray is $37,000, while the monthly operating income for 29,000 bottles of spray is $99,500.

Step-by-step explanation:

To calculate the monthly operating income for 14,000 bottles of spray and 29,000 bottles of spray, we need to determine the total revenue and total cost for each volume.

For 14,000 bottles of spray:

1. Total revenue = Number of bottles * Price per bottle = 14,000 * $9 = $126,000
2. Total cost = (Fixed costs for volumes up to 50,000 bottles) + (Variable costs per bottle * Number of bottles)

Therefore, the monthly operating income for 14,000 bottles of spray is:

Total revenue - Total cost = $126,000 - $89,000 = $37,000

Similarly, for 29,000 bottles of spray:

1. Total revenue = Number of bottles * Price per bottle = 29,000 * $9 = $261,000
2. Total cost = (Fixed costs for volumes above 50,000 bottles) + (Variable costs per bottle * Number of bottles)

Therefore, the monthly operating income for 29,000 bottles of spray is:

Total revenue - Total cost = $261,000 - $161,500 = $99,500