Avila Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts:
|
Sales
|
$1,200,000
|
|
Cost of Goods Sold
|
720,000
|
|
Gross Profit
|
480,000
|
|
Operating Expenses ($180,000 is fixed)
|
316,000
|
|
Operating Income
|
164,000
|
Cost of goods sold and variable operating expenses vary directly with sales.
What would be the operating income if actual sales are 60,000 T-shirts?