Question

Sound design sells its computer speakers for​ $135 per set. its variable cost is​ $85 per set of speakers. fixed costs are​ $85,000 per month for volumes up to​ 2,600 sets of speakers. above​ 2,600 sets, monthly fixed costs are​ $126,000. what is the budgeted operating income​ (loss) at a sales level of​ 2,200 sets of speakers per​ month?

Answer 1

Calculation of budgeted operating income(loss) at a sales level of 2,200 sets of speakers per month:

The formula to calculate the operating income/ (loss) is as follows:

Operating income /(loss) = Number of units * (Sales Price – Variable Cost) –Fixed cost

We are given the following information:

Number of units = 2200

Sales Price =$135

Variable Cost = $85

Fixed cost at the level of 2200 units shall be $ 85,000

Hence,

Operating income /(loss) = Number of units * (Sales Price – Variable Cost) –Fixed cost

= 2200*(135-85) -85000

= 110000-85000

= $25,000

Hence, the budgeted operating income at a sales level of 2,200 sets of speakers per month is $25,000.