Fun in the Sun sells beach chairs. The following facts are known for 2022:

● Each chair sells for $15.

● Variable costs are $80,000 for 10,000 chairs.

● Current production and sales are 16,000 chairs.

● Fixed costs are as follows:

a. What is the operating income for the 16,000 chairs produced and sold?

b. Discuss why fixed costs would change for different relevant ranges.

c. What is the maximum operating income that the company can expect, given the relevant range and fixed cost information?

d. For this part, assume that additional chairs beyond 16,000 will have to be sold at $12.50 each. Variable costs will remain the same except for the sales commission, which will decrease by $0.50. How many additional units must be sold at the $12.50 price to have additional income of $18,000?

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Production Range in Units 0-25,000 25,001-35,000 35,001-50,000 Fixed Costs $105,000 $182,000 $285,000