Question

Infinity Clock Company prepared the following static budget for the​ year: Static Budget ​Units/Volume 9 comma 000 Per Unit Sales Revenue $ 5.00 $ 45 comma 000 Variable Costs 1.50 13 comma 500 Contribution Margin 31 comma 500 Fixed Costs 3 comma 000 Operating​ Income/(Loss) $ 28 comma 500 If a flexible budget is prepared at a volume of 9 comma 800 ​units, calculate the amount of operating income. The production level is within the relevant range.

Answer 1

Net operating income= 31,300

Step-by-step explanation:

Giving the following information:

Static Budget:

​Units= 9,000

Selling price per unit= $5

Variable Costs per unit= $1.50

Fixed Costs= 3,000

We need to determine the operating income if 9,800 units were sold:

Sales= (9,800*5)= 49,000

Total variable costs= (9,800*1.5)= (14,700)

Contribution margin= 34,300

Fixed costs= (3,000)

Net operating income= 31,300