Question

Assume the following​ amounts: Total fixed costs Selling price per unit Variable costs per unit If sales revenue per unit increases to and units are​ sold, what is the operating​ income?

Answer 1

Answer:

The correct option is c. 129,000.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

Assume the following amounts:

Total fixed costs. $15,000

selling price per unit. $19

variable costs per unit. $12

if sales revenue per unit increases to $21 and 16,000 units are sold what is the operating income?

a 159,000

b. 336,000

c. 129,000

d. 144,000

The explanation to the answer is now provided as follows:

Since sales revenue per unit increases to $21, we use it as the selling price and proceed as follows:

Computation of Operating Income

Particular                                              Amount ($)

Sales revenue (16,000 * $21)                336,000

Variable cost (16,000 * $12)                  (195,000)  

Contribution                                            144,000

Fixed cost                                               (15,000)  

Operating income                                 129,000    

Therefore, the correct option is c. 129,000. That is, operatin income is $129,000.