A company's flexible budget for 60,000 units of production showed sales of $96,000, variable costs of $36,000, and fixed costs of $26,000. What operating income would be expected if the company produces and sells 70,000 units? Use a contribution margin format. You must show how you calculated each number for credit. Use the template below for all of the remaining problems. Check: Operating income should be greater than $43,000. (3 points)Sales $Variable costs $Contribution margin $Fixed costs $Operating income $

Calculation of Operating Income if company produces and sells 70,000 units

Sales ($96,000/60,000 units × 70,000)                          $112,000

Less variable costs ( $36,000/60,000×70,000)             ($42,000)

Contribution                                                                        $70,000

Less Period Costs

fixed costs                                                                            (26,000)

Operating Income                                                                 44,000

Explanation:

First Determine the Standard Cost or Revenue

Then Flex  the Budget to the new level of 70,000 units produced and sold

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