00:01
This question is asking about determining operating income for a certain number of units produced, and at first gives us a flexible budget, assuming 12 ,000 units are produced.
00:18
And then we are going to talk about if 28 ,000 units were produced, what is the operating income? so we'll calculate that.
00:34
So if 12 ,000 units were produced, then sales, would be $46 ,800.
00:44
$46 ,800.
00:48
Variable costs would be $12 ,000.
00:56
And i'm putting it in parentheses because i'm making like a mini income statement to calculate operating income.
01:03
So i want to remember to subtract this.
01:06
Same with fixed costs, which is $28 ,000 for a total income of $60 ,000.
01:23
$6 ,800 for the flexible budget.
01:29
So what's important to know are the individual items and how they relate to the next portion of the problem where we look at 28 ,000 units sold.
01:42
So fixed costs are going to be the same because that is the definition of fixed costs...