If the revenue is $15000, the total variable cost is $5000 and the fixed cost $2000 then the operating income will be ____________?
Correct answer: B. $8,000
- A. $4,000
- B. $8,000
- C. $5,000
- D. $3,000
Explanation
Operating income equals revenue minus variable cost and fixed cost: $15,000 − $5,000 − $2,000 = $8,000. Equivalently, the $10,000 contribution margin less $2,000 fixed cost gives $8,000.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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