Krazy Kayaks sells its entryminuslevel kayaks for $750 each. Its variable cost is $500 per kayak. Fixed costs are $25,000 per month for volumes up to 1,100 kayaks. Above 1,100 kayaks, monthly fixed costs are $60,000. What is the budgeted operating income at a level of 2,500 kayaks per month?

Question

Business

Charlize Joseph

4 May, 11:32

Krazy Kayaks sells its entryminuslevel kayaks for $750 each. Its variable cost is $500 per kayak. Fixed costs are $25,000 per month for volumes up to 1,100 kayaks. Above 1,100 kayaks, monthly fixed costs are $60,000. What is the budgeted operating income at a level of 2,500 kayaks per month?

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Taylor Shannon · Answer 1

Net operating income = 565,000

Explanation:

Giving the following information:

Krazy Kayaks sells its entry-level kayaks for $750 each. Its variable cost is $500 per kayak. Fixed costs are $25,000 per month for volumes up to 1,100 kayaks. Above 1,100 kayaks, monthly fixed costs are $60,000.

Sales = 2,500*750 = 1,875,000

COGS = (500*2,500) = (1,250,000)

Gross profit = 625,000

Fixed costs = (60,000)

Net operating income = 565,000