Question

A company's flexible budget for 14,000 units of production showed total contribution margin of $42,000 and fixed costs, $40,000. The operating income expected if the company produces and sells 26,000 units is:

Answer 1

Answer:

$2,000 is the expected operating income.

Step-by-step explanation:

Given:

The company's flexible budget = 14000 units.

Total contribution margin = $42,000.

Fixed costs = $40,000.

The company produces and sells 26,000 units.

Now, to find the operating income expected:

So, to get the operating income we deduct the fixed costs from the total contribution margin:

$Total\ contribution\ margin-Fixed\ costs\\\\=\ 42,000-\ 40,000\\\\=\ 2,000.$

Therefore, $2,000 is the expected operating income.