International Data Systems' information on revenue and costs is relevant only up to a sales volume of 125,000 units. After 125,000 units, the market becomes saturated and the price per unit falls from $18.00 to $10.80. Also, there are cost overruns at a production volume of over 125,000 units, and variable cost per unit goes up from $9.00 to $9.50. Fixed costs remain the same at $75,000.

a. Compute operating income at 125,000 units.

Operating income

b. Compute operating income at 225,000 units.

Operating income