Question

Assume the following​ amounts: Total fixed costs $ 23 comma 000 Selling price per unit $ 19 Variable costs per unit $ 12 If sales revenue per unit increases to $ 22 and 14 comma 000 units are​ sold, what is the operating​ income? A. $ 163 comma 000 B. $ 117 comma 000 C. $ 308 comma 000 D. $ 140 comma 000

Answer 1

B. $ 117 comma 000

Step-by-step explanation:

The Net/operating income is the difference between the total sales and total costs, Total cost is made up of the fixed and variable cost.

Like the total sales, the total variable cost is also affected by the level of activities or units produced/sold.

Mathematically,

Net income = Total sales - variable cost - fixed cost

= $22(14,000) - $12(14,000) - $23,000

= $117,000

Answer 2

B. $ 117 comma 000

Step-by-step explanation:

Selling price per unit $ 19 *14, 000= $ 266000

Variable costs per unit $ 12 *14, 000= $ 168,000

Contribution Margin $ 98,000

Less Total fixed costs $ 23, 000

Operating Income $ 75,000

If sales revenue per unit increases to $ 22

Selling price per unit $ 22 *14, 000= $ 308000

Variable costs per unit $ 12 *14, 000= $ 168,000

Contribution Margin $ 140,000

Less Total fixed costs $ 23, 000

Operating Income $ 117,000