Question Details

Answered: - 11) International Data Systems information on revenue and costs


11)

International Data Systems information on revenue and costs is only relevant up to a sales volume of 117,000 units. After 117,000 units, the market becomes saturated and the price per unit falls from $20.00 to $11.80. Also, there are cost overruns at a production volume of over 117,000 units, and variable cost per unit goes up from $10.00 to $10.50. Fixed costs remain the same at $67,000.

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a. Compute operating income at 117,000 units.
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??Operating income ?$???
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b. Compute operating income at 217,000 units.
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??Operating income

?$



Solution: Computation of the Operating Income

 

Particulars

 

Sales Revenue

 

Less: Variable cost

 

Contribution Margin

 

Less: Fixed Costs

 

Net Income

 


 

$

 

$

 

$

 

$

 

$

 


 

117,000

 

Amount

 

2,340,000

 

1,170,000...

 


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DATE ANSWERED

Oct 07, 2020

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