Eastern Electronics has the following per unit amounts for the production of electronic components for automobiles: At its current production and sales of 10,000 units, it incurs $60,000 of fixed costs for cost of goods sold and SG&A costs. Unfortunately, Eastern Electronics has fallen on hard times, and since sales have been declining, production has also been deceased significantly for the current year. If Eastern Electronics is only able to produce and sell 6,000 units, is it still profitable? Compute the operating income for Eastern Electronics.

Question

Eastern Electronics has the following per unit amounts for the production of electronic components for automobiles:  At its current production and sales of 10,000 units, it incurs $60,000 of fixed costs for cost of goods sold and SG&A costs. Unfortunately, Eastern Electronics has fallen on hard times, and since sales have been declining, production has also been deceased significantly for the current year. If Eastern Electronics is only able to produce and sell 6,000 units, is it still profitable? Compute the operating income for Eastern Electronics.

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The Answer of Eastern Electronics has the following per unit amounts for the production of electronic components for automobiles:  At its current production and sales of 10,000 units, it incurs $60,000 of fixed costs for cost of goods sold and SG&A costs. Unfortunately, Eastern Electronics has fallen on hard times, and since sales have been declining, production has also been deceased significantly for the current year. If Eastern Electronics is only able to produce and sell 6,000 units, is it still profitable? Compute the operating income for Eastern Electronics.

Eastern Electronics Has the Following Per Unit Amounts for the Production