Question

Alphonse Company manufactures staplers. The budgeted sales price is $ 16.00 per​ stapler, the variable costs are $ 4.00 per​ stapler, and budgeted fixed costs are $ 10 comma 000. What is the budgeted operating income for 5 comma 000 ​staplers?

Answer 1

$50,000

Step-by-step explanation:

Budgeted operating income is the difference between the total sales and the total expenses. The total expense is made up of the fixed cost and variable cost.

The variable cost and sales are dependent on the level of activities. The sales less the variable cost gives the contribution margin.

As such, contribution less fixed cost gives the budgeted operating income.

The budgeted operating income

= ($16 × 5000) - ($4 × 5000) - $10,000

= $50,000