Southern Instruments makes calculators for business applications. The budgeted selling price is $120 per calculator, the variable rate is $98 per calculator and budgeted fixed costs are $150,000 per month
What is the budgeted operating income for 15,000 calculators sold in a month?
A) $330,000
B) $1,620,000
C) $1,800,000
D) $180,000
D
Explanation: D)
Revenue (# of units × selling price per unit) 15,000 × 120 = $1,800,000
Variable Costs (# of units × variable cost per unit) 15,000 × 98 = $1,470,000
Fixed costs $150,000
Total expenses 1,470,000 + 150,000 = $1,620,000
Operating income 1,800,000 - 1,620,000 = $180,000
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