Fave Motion Pictures sells movie tickets for $14 per movie patron. Variable costs are $4.50 per movie patron and fixed costs are $52,000 per month. The company's relevant range extends to 33,000 movie patrons per month. What is Fave Motion Pictures' projected operating income if 20,000 movie patrons see movies during a month?
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Ответ:
The operating income amounts to $138,000
Explanation:
Computing the operating income is as:
Operating income = Contribution margin - Fixed cost
Computing the contribution margin as:
Contribution margin = Sales - Variable cost
where
Sales is $14
Variable cost os $4.50
So,
Contribution margin = $14 - $4.50
Contribution margin = $9.5
It will be multiplied with the 20,000 movie patrons
So, it will be:
Contribution margin = $9.5 × 20,000
Contribution margin = $190,000
And
Fixed cost is $52,000
Putting the values above:
Operating Income = $190,000 - $52,000
Operating income = $138,000
Ответ: