Calculating Budgeted Operating Income for Family Furniture

What is the budgeted operating income for the month assuming that Family Furniture sells 175 tables?

Family Furniture sells a table for $1,000, its fixed costs are $40,000, while its variable costs are $700 per table. It currently plans to sell 175 tables this month. What is the budgeted operating income for the month assuming that Family Furniture sells 175 tables?

Answer:

The budgeted operating income for the month, assuming Family Furniture sells 175 tables, is $12,500.

Calculating budgeted operating income involves understanding the fixed costs, variable costs, and total revenue of a business. In the case of Family Furniture, their fixed costs amount to $40,000, while their variable costs per table are $700. By selling each table for $1,000 and planning to sell 175 tables this month, we can determine the budgeted operating income.

To calculate the total revenue, we multiply the selling price per table ($1,000) by the number of tables sold (175), which results in a total revenue of $175,000.

Next, we calculate the total variable costs by multiplying the variable cost per table ($700) by the number of tables sold (175), which amounts to $122,500.

Finally, to find the budgeted operating income, we subtract the total variable costs and fixed costs from the total revenue:

Budgeted operating income = Total revenue - Total variable costs - Fixed costs

Plugging in the values:

Budgeted operating income = $175,000 - $122,500 - $40,000

Budgeted operating income = $12,500

Therefore, the budgeted operating income for Family Furniture for the month, assuming they sell 175 tables, is $12,500.