Question

Fave Motion Pictures sells movie tickets for $ 15 per movie patron. Variable costs are $ 9.00 per movie patron and fixed costs are $ 51 comma 000 per month. The​ company's relevant range extends to 33 comma 000 movie patrons per month. What is Fave Motion​ Pictures' projected operating income if 20 comma 000 movie patrons see movies during a​ month?

Answer 1

Fave Motion​ Pictures' projected operating income if 20,000 movie patrons see movies during a​ month is $ 69,000.

Step-by-step explanation:

We subtract the variable and fixed costs from the sales revenue to get the projexted operating income.

Fave Motion Pictures

Operating Income for 20,000 units

Sales $ 15 * 20,000= $ 300,000

Variable costs $ 9.00 *20,000 = $180,000

Fixed costs $ 51, 000

Operating Income $ 69,000

Fave Motion Pictures

Operating Income for 33,000 units

Sales $ 15 * 33,000= $ 495,000

Variable costs $ 9.00 *33,000 = $297,000

Fixed costs $ 51, 000

Operating Income $ 147,000

The fixed costs will not change as they are treated as period costs given per month. Fave Motion​ Pictures' projected operating income if 20,000 movie patrons see movies during a​ month is $ 69,000.