Question

Pacific Company sells only one product for $ 12 per​ unit, variable production costs are $ 3 per​ unit, and selling and administrative costs are $ 1.50 per unit. Fixed costs for 11 comma 000 units are $ 6 comma 000. The operating income is​ ________ when 11 comma 000 units are sold.

Answer 1

Answer: The operating income is​ $76 comma 500 when 11 comma 000 units are sold.

Explanation:

Selling price = $12 / unit

Variable cost of production = $3 / unit

Selling and Admin cost = $1.5 / unit

Fixed cost for 11 comma 000 units are $ 6 comma 000.

For 11 comma 000 units,

Sales  = 12 x 11000 = $132000

cost of production = 3 x 11000 = $33000

Selling and Admin cost = 1.5 x 11000 =$16500

Fixed cost = $6000

Operating Income = Sales - Cost of Production - Selling and Admin cost - Fixed cost

Operating income = 132000 - 33000 - 16500 - 6000 = $76,500

The operating income is​ $76 comma 500 when 11 comma 000 units are sold.

Answer 2

Answer:

$76500

Explanation:

selling income per unit = $12

variable production cost per unit = $3

selling and admin cost per unit = $1.5

fixed cost = $6000

total units produced = 11000

To calculate the operating income

Total selling income = $12 * 11000 = $132000

Total variable cost = $3 * 11000 = $33000

total selling and admin cost = $1.5 * 11000 = $16500

fixed cost = $6000

= (Total selling income ) - (total variable production cost - total selling and admin cost - fixed cost )

= 132000 - 33000 - 16500 - 6000 = $76500