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Product A has a sales price of $18 per unit. Based on a 11,000-unit production level, the variable costs are $10 per unit and the fixed costs are $7 per unit. Using a flexible budget for 13,500 units, what is the budgeted operating income from Product A

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Answer:

Net operating income= $31,000

Explanation:

First, we need to calculate the total fixed costs:

Total fixed costs= 7*11,000= 77,000

Now, the ner income for 13,500 units:

Sales= 18*13,500= 243,000

Total variable cost= 13,500*10= (135,000)

Contribution margin= 108,000

Total fixed costs= (77,000)

Net operating income= $31,000

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