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6 April, 16:42

A company's flexible budget for 24,000 units of production showed per unit contribution margin of $2.50 and fixed costs, $31,200. The operating income expected if the company produces and sells 29,000 units is:

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  1. 6 April, 20:22
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    The operating income will be:

    Total contribution ($2.50 x 29,000) = 72,500

    Less: Fixed cost = 31,200

    Operating income = 41,300

    Explanation:

    The contribution per unit is $2.50. This per unit contribution will be multiplied by the number of units produced and sold in order to obtain total contribution. Operating income is the excess of total contribution over fixed cost.
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