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nrod1120 nrod1120
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Tina Industries manufactures a product whose variable costs are 62.5% of sales. Tina's tax rate is 35% and net income for the year was $33,696. If Tina sold 23,040 units at $16 per unit, what were the company's operating income and fixed costs (round your answer if necessary)?

▸ $51,840; $86,400

▸ $96,275; $134,125

▸ $171,936; $75,661

▸ $138,240; $41,965
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Managerial Accounting


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hannahfenghannahfeng
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$51,840; $86,400

23,040 × $16 = $368,640
$368,640 × (1 - 0.625) = CM; CM = $138,240
Target operating income × (1 - tax rate) = Net income;
Target operating income = $33,696 ÷ 0.65 = $51,840;
CM - Fixed costs = Target operating income;
$138,240 - FC = $51,840; FC = $86,400
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