Premium Beds is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Premium Beds 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 2,500.00 Sales commissions 280.00 Total per-unit variable costs$2,780.00 Total annual fixed costs: Advertising$230,800 Rent 176,900 Salaries 385,800 Total annual fixed costs$793,500 If 3,550 bed frames were sold, Premium Bed's operating income (πB) would be: Multiple Choice $915,000. $955,000. $875,000. $1,015,000. $795,000.

CVP analysis is used to identify the changes in costs and volume affect a company's operating…

Answered: remium Beds is a retailer of luxury bed…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 54P

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Premium Beds is a retailer of luxury bed frames located in Los Angeles, California. Due to a recent industry-wide financial crisis, the CFO of Premium Beds 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		2,500.00
Sales commissions		280.00
Total per-unit variable costs	$	2,780.00
Total annual fixed costs:
Advertising	$	230,800
Rent		176,900
Salaries		385,800
Total annual fixed costs	$	793,500

If 3,550 bed frames were sold, Premium Bed's operating income (π_B) would be:

Multiple Choice

$915,000.
$955,000.
$875,000.
$1,015,000.
$795,000.

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