Question

Summer Nights sells bottles of bug spray for $8.00 each. Variable costs are $2.00 per bottle, while fixed costs are $40,000 per month for volumes up to 40,000 bottles of spray and $58,000 per month for volumes above 40,000 bottles of spray. The flexible budget would reflect monthly operating income for 10,000 bottles of lotion and 22,000 bottles of lotion of what dollar amounts

O A. $80,000 and $176,000, respectively
O B. $20,000 and $92,000, respectively
O C. $40,000 and $92,000, respectively
OD. $2000 and $118,000, respectively

Answer 1

B. $20,000 and $92,000, respectively

Step-by-step explanation:

Summer Nights Flexible budget

10,000 bottles 22,000 bottles

Sales $80,000 $176,000

Less:Variable costs $20,000 $44,000

Less:Fixed Costs $40,000 $40,000

Operating Income $20,000 $92,000

Therefore the flexible budget would reflect monthly operating income for 10,000 bottles of lotion and 22,000 bottles of lotion of operating income $20,000 and $92,000, respectively dollar amounts.