Question

Sitz Company makes chairs. The budgeted selling price is​ $55 per​ chair, the variable rate is​ $25 per chair and budgeted fixed costs are​ $20,000 per month. What is the budgeted operating income for​ 3,100 chairs sold in a​ month?

Answer 1

Answer:

$73,000

Explanation:

Data provided in the question:

Selling Price per unit = $55

Variable rate per unit = $15

Budgeted fixed costs = ​ $20,000

Number of chairs sold = 3,100

Now,

Contribution per unit = Selling Price per unit - Variable rate per unit

= $55 - $25

= $30

Therefore,

Total contribution = Contribution per unit  × Number of chairs sold

= $30 × 3,100

= $93,000

Hence,

Operating income = Total contribution - Budgeted fixed costs

= $93,000 - $20,000

= $73,000