Question

Terry's Appliances manufactures and sells parts for the new washer. The parts for the new washers sell for $60, and the variable operating cost per unit are $10.

Answer 1

$1,550,000

Step-by-step explanation:

The computation of the operating income is shown below:

As we know that

Operating income = Sales - variable cost - fixed cost

where,

Sales = 32,000 parts × $60

= $1,920,000

Variable cost = 32,000 parts × $10

= $320,000

And, the fixed cost is $50,000

So, the operating income is

= $1,920,000 - $320,000 - $50,000

= $1,550,000

We simply applied the above formula to determine the operating income