Question

Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $52,000. based on this information, the budgeted operating income for 28,000 units would be:

Answer 1

Total contribution margin = $105,000

Units = 30,000

Fixed cost = $40,000

Operating income for 28,000 units = ?

Contribution margin per unit = $105,000 / 30,000

= $3.50

Then budgeted operating income for 28,000 units = ($3.50 x 28,000) - $40,000

= 98,000 – 40,000

= $58,000

So, the budgeted operating income for 28,000 units would be $58,000.