Question

Alphonse Company manufactures staplers. The budgeted sales price is $14.00 per stapler, the variable costs are $3.00 per stapler, and budgeted fixed costs are $12,000. What is the budgeted operating income for 4200 staplers

Answer 1

$34200

Step-by-step explanation:

Given: The budgeted sales price= $14 per stapler

The variable cost= $3 per stapler.

Budgeted fixed cost= $12000.

Total number of stapler= 4200.

First finding the total revenue earned by Alphonse company, if they sell 4200 staplers.

Total revenue=
`Sales\ price* number\ of\ staplers`

⇒ Total revenue=
`\$ 14* 4200`

∴ Total revenue= $58800

Now, calculating total cost of manufacturing stapler.

Total cost=
`Fixed\ cost+ variable\ cost`

Total cost=
`\$ 12000+ \$ 3* 4200`

⇒ Total cost=
`12000+12600`

∴ Total cost=
`\$ 24600`

Next computing the budgeted operating income.

Operating income=
`Total\ revenue- Total\ cost`

⇒ Operating income=
`\$ 58800-\$ 24600`

∴ Operating income=
`\$ 34200`

Hence, $34200 is the budgeted operating income for 4200 staplers.