1 answer

Elvis Electric Profits Given Sales Volume & Variable/Fixed Costs Easy PREVIOUS NEXT Elvis Electric (EE) buys...

Question:

Elvis Electric Profits Given Sales Volume & Variable/Fixed Costs Easy PREVIOUS NEXT Elvis Electric (EE) buys portable generat
Elvis Electric Profits Given Sales Volume & Variable/Fixed Costs Easy PREVIOUS NEXT Elvis Electric (EE) buys portable generators for $450 and sells them for $720. He pays a sales commission of 5% of sales revenue. EE pays $10,000 a month rent for the store and pays $16,700 a month in staff salaries. EE sold 200 generators in June. What is the operating income for the month of June? Enter your response as a whole number, without dollar sign or commas (i.e., 105000 rather than $105,000).

Answers

Selling price per unit = $720

Purchase price per unit = $450

Sales commission = 5%

= 720 x 5%

= $36

Variable cost per unit = Purchase price per unit + Sales commission

= 450+36

= $486

Rent expense = $10,000

Staff salaries = $16,700

Total fixed expense = Rent expense + Staff salaries

= 10,000+16,700

= $26,700

Income Statement
Sales ( 200 x 720) 144,000
Variable cost ( 200 x 486) -97,200
Contribution Margin $46,800
Fixed cost -26,700
Operating Income 20100

Operating income for the month of June = 20100.

Kindly comment if you need further assistance. Thanks‼!

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