2C1B PHILLIPS & COMPANY PRODUCES EDUCATIONAL SOFTWARE. ITS UNIT...

198.

CSO: 2C1a

LOS: 2C1b

Phillips & Company produces educational software. Its unit cost structure, based upon

an anticipated production volume of 150,000 units, is as follows.

Sales price

$160

Variable costs

60

Fixed costs

55

The marketing department has estimated sales for the coming year at 175,000 units,

which is within the relevant range of Phillip’s cost structure. Phillip’s break-even volume

(in units) and anticipated operating income for the coming year would amount to

a.

82,500 units and $7,875,000 of operating income.

b.

82,500 units and $9,250,000 of operating income.

c.

96,250 units and $3,543,750 of operating income.

d.

96,250 units and $7,875,000 of operating income.