Ibis Paper Company prepared the following static budget for November: Static budget Units/Volume 12,000 Per unit Sales revenue $21.00 $252,000 Variable costs 8.00 96,000 Contribution margin 156,000 Fixed costs 13,000 Operating income / (Loss) $143,000 If a flexible budget is prepared at a volume of 13,300 units, calculate the operating income at 13,300 units of production. The production level is within the relevant range.

Question

Zaid Perry

Business

16 November, 13:56

Ibis Paper Company prepared the following static budget for November: Static budget Units/Volume 12,000 Per unit Sales revenue $21.00 $252,000 Variable costs 8.00 96,000 Contribution margin 156,000 Fixed costs 13,000 Operating income / (Loss) $143,000 If a flexible budget is prepared at a volume of 13,300 units, calculate the operating income at 13,300 units of production. The production level is within the relevant range.

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Dear · Answer 1

Net operating income = $159,900

Explanation:

Giving the following information:

Sales revenue = $21.00

Variable costs = $8.00

Fixed costs 13,000

For 13,300 units:

Sales = 21*13,300 = 279,300

Total variable costs = 8*13,300 = (106,400)

Total contribution margin = 172,900

Fixed costs = (13,000)

Net operating income = 159,900