Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000.
- Based on this information, the budgeted amount of sales for 20,000 units would be:
A) $181,500.
B) $117,272.
C) $165,000.
D) $141,900.
E) $150,000.

Question

Quizplus · Accepted Answer

The variable cost per unit is $99,000 / 22,000 = $4.50. The total cost for 20,000 units is $90,000 (variable) + $30,000 (fixed) = $120,000. The operating income for 22,000 units is $36,000, so the total sales for 22,000 units is $165,000. The sales per unit is $165,000 / 22,000 = $7.50. Therefore, for 20,000 units, sales would be 20,000 * $7.50 = $150,000.

Based on a Predicted Level of Production and Sales of 22,000