Sound Design Sells Its Computer Speakers for $135 Per Set

Multiple Choice

Sound Design sells its computer speakers for $135 per set. Its variable cost is $85 per set of speakers. Fixed costs are $85,000 per month for volumes up to 2600 sets of speakers. Above 2600 sets, monthly fixed costs are $126,000. What is the budgeted operating income (loss) at a sales level of 2200 sets of speakers per month?

A) Operating loss of $16,000
B) Operating income of $110,000
C) Operating income of $25,000
D) Operating income of $212,000