Based on a predicted level of production and sales of 15,000 units, a company an

Question

Based on a predicted level of production and sales of 15,000 units, a company anticipates reporting operating income of $22,000 after deducting variable costs of $90,000 and fixed costs of $8,000.

a.$8,000 of fixed costs and $90,000 of variable costs.

b.$8,000 of fixed costs and $102,000 of variable costs.

c.$9,600 of fixed costs and $90,000 of variable costs.

d.$9,600 of fixed costs and $108,000 of variable costs.

e.$8,000 of fixed costs and $108,000 of variable costs.

Based on a predicted level of production and sales of 15,000 units, a company anticipates reporting operating income of $22,000 after deducting variable costs of $90,000 and fixed costs of $8,000.

Explanation / Answer

e.$8,000 of fixed costs and $108,000 of variable costs. Statement showing computations Particulars Amount No of Units            15,000.00 Variable costs            90,000.00 Variable cost per unit= 90,000/15,000                      6.00 No of Units            18,000.00 Variable costs for 18,000 Units = 18,000*6         108,000.00 Fixed costs would remain same              8,000.00

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