Question
Big Island Coffee Co. produced and sold 120,000 units last year. Per unit revenue and costs were as follows: Revenue $35.00 Cost of Goods Sold:
Big Island Coffee Co. produced and sold 120,000 units last year. Per unit revenue and costs were as follows:
Revenue $35.00 Cost of Goods Sold: Direct Materials $20.00 Direct Labour 3.00 Variable Manufacturing Overhead 2.00 Fixed Manufacturing Overhead 1.00 Total Cost of Goods Sold 26.00 Gross Margin $9.00 Selling and Administrative Costs: Sales Commissions (10% of sales) $3.50 Administrative Salaries 6.00 Total Selling and Administrative 9.50 Operating Income <$0.50> Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year's production.
Calculate last year's operating income when the company produced and sold 120,000 units.
options: A) $0 B) $<60,000> C) $<500,000> D) $<800,000>
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