Sound design sells its computer speakers for $135 per set. its variable cost is $85 per set of speakers. fixed costs are $85,000 per month for volumes up to 2,600 sets of speakers. above 2,600 sets, monthly fixed costs are $126,000. what is the budgeted operating income (loss) at a sales level of 2,200 sets of speakers per month?

Calculation of budgeted operating income(loss) at a sales level of 2,200 sets of speakers per month:

The formula to calculate the operating income/ (loss) is as follows:

Operating income /(loss) = Number of units * (Sales Price – Variable Cost) –Fixed cost

We are given the following information:

Number of units = 2200

Sales Price =$135

Variable Cost = $85

Fixed cost at the level of 2200 units shall be $ 85,000

Hence,

Operating income /(loss) = Number of units * (Sales Price – Variable Cost) –Fixed cost

= 2200*(135-85) -85000

= 110000-85000

= $25,000

Hence, the budgeted operating income at a sales level of 2,200 sets of speakers per month is $25,000.

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