Stephanie's Bridal Shoppe Operating Income Calculation

What is Stephanie's Bridal Shoppe's operating income when 180 dresses are sold?

A. $100,000

B. $120,000

C. $18,000

D. $200,000

E. $80,000

Final answer:

The operating income of Stephanie's Bridal Shoppe when 180 dresses are sold is $18,000, which was calculated by subtracting total costs (variable and fixed) from the total revenue. Hence, option C is the correct answer.

Explanation:

To compute the operating income, we take the total revenue and subtract both the variable costs and fixed costs.

Given that the average selling price of a dress is $1,000, if the shop sells 180 dresses, the total revenue will be 180*$1,000 = $180,000.

The total variable cost is $400 per dress or $400*180 = $72,000.

Subtracting this and the fixed cost of $90,000 from the total revenue, ($180,000 - $72,000 - $90,000), we find that the operating income is $18,000. Hence, option C is the correct answer.