Question

The Grumpy Company's breakeven point in units is 25,000. Assuming that variable costs are 60% and fixed costs are $450,000, what is the company's projected operating income if sales are $1,450,000?

a) $570,000
b) $350,000
c) $420,000
d) Cannot be determine with the information provided

Answer 1

To calculate the projected operating income, subtract the total variable costs and the total fixed costs from the sales.

Step-by-step explanation:

To calculate the projected operating income, we first need to calculate the total variable costs, which are 60% of the sales. Since the sales are $1,450,000, the total variable costs would be 60% of $1,450,000, which is $870,000.

Next, we can calculate the total fixed costs, which are given as $450,000.

Finally, we subtract the total variable costs and the total fixed costs from the sales to find the projected operating income. In this case, the projected operating income would be $1,450,000 - $870,000 - $450,000 = $130,000.