Question

The following information is for the Jeffries​ Corporation: Product​ A: Revenue ​$18.00 Variable Cost ​$14.00 Product​ B: Revenue ​$21.00 Variable Cost ​$13.00 Total fixed costs ​$143,000 What is the operating income of Jeffries​ Corporation, assuming actual sales total​ 35,600 units, and the sales mix is three units of Product A and one unit of Product​ B? A. ​$35,000 B. ​$321,000 C. ​$667,500 D. ​$178,000

Answer 1

Jeffries Corporation's Operating Income from the two products is A. ​$35,000.

The operating income is the difference between the revenue and operating costs (variable and fixed costs).

Data and Calculations:

                             Product A     Product B     Total

Revenue                 $18.00           $21.00

Variable cost            14.00              13.00

Contribution            $4.00             $8.00

Fixed costs                                                 $143,000

Total sales units                                            35,600

Sales mix                  3                        1               4

Sales units             26,700           8,900      35,600

Total contribution$106,800      $71,200  $178,000

Total fixed costs                                          143,000

Operating income                                      $35,000

Thus, the operating income is $35,000.

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