Kevin Company Prepared the Following Static Budget for the Year

question 4

Multiple Choice

Kevin Company prepared the following static budget for the year 2015: $$\begin{array} { | l | c | r | } \hline \text { Static Budget } & & \\\hline \text { Units/volume } & & 5,000 \\\hline& \text { Per Unit }\\\hline \text { Sales revenue } & \$ 3.00 & \$ 15,000 \\\hline \text { Variable expenses } & \$ 1.50 & 7,500\\\hline \text { Contribution margin } & & 7,500\\\hline \text { Fixed expenses } & & 4,000 \\\hline \text { Operating income/(loss) } & & \$3,500 \\\hline\end{array}$$ If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income.

• A) $3,500
• B) $10,500
• C) $6,500
• D) $4,000