Kevin Couriers Company Prepared the Following Static Budget for the Year

question 171

Multiple Choice

Kevin Couriers Company prepared the following static budget for the year: $$\begin{array} { | l | c | r | } \hline \text { Static Budget } & & \\\hline \text { Units/Volume } & & 5,000 \\\hline & \text { Per Unit } & \\\hline\text { Sales Revenue } & \$ 7.00 & \$ 35,000 \\\hline \text { Variable Costs } & 1.50 & \underline { 7,500 } \\\hline \text { Contribution Margin } & & 27,500 \\\hline \text { Fixed Costs } & & \underline { 4,000 } \\\hline\text { Operating Income/(Loss) } & & \$ 23, 500 \\\hline \end{array}$$ If a flexible budget is prepared at a volume of 7,500,calculate the amount of operating income.The production level is within the relevant range.

• A) $37,250
• B) $23,500
• C) $11,250
• D) $4,000

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