Based on a predicted level of production and sales of 30,000 units,a company anticipates total contribution margin of $105,000,fixed costs of $40,000,and operating income of $52,000.Based on this information,the budgeted operating income for 28,000 units would be:
A)$52,000.
B)$135,333.
C)$58,000.
D)$72,500.
E)$105,000.

Question

Quizplus · Accepted Answer

The contribution margin per unit can be calculated as follows: 
Contribution margin = Total contribution margin/Number of units = $105,000/30,000 = $3.50 per unit

Using the contribution margin per unit, we can calculate the expected operating income for 28,000 units:

Operating income = (Contribution margin per unit x Number of units) - Fixed costs

Operating income = ($3.50 x 28,000) - $40,000 = $58,000

Therefore, the budgeted operating income for 28,000 units is $58,000, so the correct answer is C.

Based on a Predicted Level of Production and Sales of 30,000