USE THE FOLLOWING TO ANSWER QUESTIONS 4 AND 5:

Princess Ariel sells two types of beach towels, Standard and Deluxe. For the Standard towel, budgeted sales for the the year are $450,000, budgeted variable expenses are $360,000, and the budgeted contribution margin ratio is 20%. For the Deluxe towel, budgeted sales for the year are $50,000, budgeted variable expenses are $20,000, and the budgeted contribution margin ratio is 60%. Princess Ariel also budgets $57,600 in company-wide fixed expenses for the year.

4.) Princess Ariel's budgeted operating income for the year is:

a.) $62,400 b.) $120,000 c.) 32,400 d.) 4,800

5.) Princess Ariel's actual total sales for the year were $500,000; however, sales of Standard towels were $300,000 and sales of Deluxe towels were $200,000. Variable and fixed expenses were in line with the budget as presented in question 4 above. Princess Ariel's actual operating income for the year was:

a.) $120,000 b.) $74,800 c.) $62,400 d.) $122,400