To find the net operating income in the planning budget for Ruozzo Corporation for July, we'll calculate the total costs and compare them to the expected revenue assuming 27 customers were planned to be served. Here's the step-by-step process:
### Step 1: Identify Fixed and Variable Costs
Given are:
- Fixed Costs:
- Employee salaries: [tex]$4,500
- Travel expenses: $[/tex]43,100
- Other expenses: [tex]$36,900
- Variable Costs per Customer:
- Revenue: $[/tex]0 (no variable revenue is mentioned)
- Employee salaries: [tex]$0 (Employee salaries are fixed costs)
- Travel expenses: $[/tex]900
- Other expenses: [tex]$500
### Step 2: Calculate the Total Fixed Costs
Sum of all fixed costs:
\[ \text{Total Fixed Costs} = \$[/tex]4,500 (\text{Employee salaries}) + \[tex]$43,100 (\text{Travel expenses}) + \$[/tex]36,900 (\text{Other expenses}) = \[tex]$84,500 \]
### Step 3: Calculate the Total Variable Costs for the Expected Customers
The total variable cost depends on the number of customers expected:
\[ \text{Total Variable Costs} = (\$[/tex]900 + \[tex]$500) \times 27 \text{ (\# of expected customers)} = \$[/tex]1,400 \times 27 = \[tex]$37,800 \]
### Step 4: Calculate the Budgeted Total Cost
Combine the total fixed costs and total variable costs for the expected number of customers:
\[ \text{Budgeted Total Cost} = \$[/tex]84,500 (\text{Total Fixed Costs}) + \[tex]$37,800 (\text{Total Variable Costs}) = \$[/tex]122,300 \]
### Step 5: Calculate the Expected Revenue
With no variable revenue:
[tex]\[ \text{Total Revenue Expected} = 0 \][/tex]
### Step 6: Calculate the Net Operating Income
Net operating income is the revenue minus total costs:
[tex]\[ \text{Net Operating Income} = \text{Total Revenue Expected} - \text{Budgeted Total Cost} \][/tex]
[tex]\[ \text{Net Operating Income} = 0 - \$122,300 = -\$122,300 \][/tex]
### Conclusion
Therefore, the net operating income as per the planning budget assuming 27 customers would be closest to:
[tex]\[
−\$122,300.
\][/tex]
Based on the given multiple choice options:
- \[tex]$12,700
- \$[/tex]15,586
- \[tex]$11,800
- \$[/tex]3,700
Since none of these values match exactly, it indicates the possibility of using different budget scenarios; however, the calculated net operating income for the planned budget scenario (27 customers) is - \$122,300.
