Sleepy Time is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Sleepy Time fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below. Sales price per unit$ 3,250.00Per-unit variable costs: Invoice cost2,468.80Sales commissions331.20Total per-unit variable costs$ 2,800.00Total annual fixed costs: Advertising$ 236,500Rent178,500Salaries386,500Total annual fixed costs$ 801,500 If 4,250 bed frames were sold, Sleepy Time's operating income (πB) would be: (Do not round intermediate calculations.)

In this question we have to calculate operating income.

Answered: Sleepy Time is a retailer of luxury bed…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sleepy Time is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Sleepy Time fears a significant drop in the firm's upcoming income stream. The CFO asked you to use the company financial information provided below.

Sales price per unit	$ 3,250.00
Per-unit variable costs:
Invoice cost	2,468.80
Sales commissions	331.20
Total per-unit variable costs	$ 2,800.00
Total annual fixed costs:
Advertising	$ 236,500
Rent	178,500
Salaries	386,500
Total annual fixed costs	$ 801,500

If 4,250 bed frames were sold, Sleepy Time's operating income (π_B) would be: (Do not round intermediate calculations.)

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