PLEASE PROVIDE THE SOLUTION! THANK YOU! Speedy Bikes Couriers Company prepared t

Question

PLEASE PROVIDE THE SOLUTION! THANK YOU!

Speedy Bikes Couriers Company prepared the following static budget for the year:

Static Budget

Units/Volume

5,000

Per Unit

Sales Revenue

$5

$25,000

Variable Costs

1.5

7,500

Contribution Margin

117,500

Fixed Costs

4,000

Operating Income/(Loss)

$13,500

If a flexible budget is prepared at a volume of8,300, calculate the amount of operating income. The production level is within the relevant range.

A.$25,050

B.$12,450

c..$13,500

D $4,000

Static Budget

Units/Volume

5,000

Per Unit

Sales Revenue

$5

$25,000

Variable Costs

1.5

7,500

Contribution Margin

117,500

Fixed Costs

4,000

Operating Income/(Loss)

$13,500

Explanation / Answer

contribution margin per unit = 5-1.5 = 3.5 per unit

Total contribution if 8300 units are produced = 3.5 * 8300 =$ 29050

less: Fixed cost                                                                (4000)

Net operating income                                                         25050

correct option is "A" - 25050

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