Asked by Claudia Holton on May 09, 2024
Verified
Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?
A) $8,000 increase
B) $8,000 decrease
C) $30,000 decrease
D) $30,000 increase
Operating Income
Revenue obtained from the main operations of a business, not including the costs of interest and taxes.
Variable Costs
Expenditures that fluctuate in direct relation to production or sales volumes, such as labor costs and materials used.
Fixed Costs
are expenses that do not change in total over a period of time, regardless of the level of production or sales volume, such as rent or salaries.
- Comprehend how variations in sales volume impact costs and profitability.
- Comprehend and determine how variations in sales volume affect operating income.
Verified Answer
Learning Objectives
- Comprehend how variations in sales volume impact costs and profitability.
- Comprehend and determine how variations in sales volume affect operating income.
Related questions
Decaprio Incorporated Produces and Sells a Single Product ...
Variable Costs as a Percentage of Sales for Lemon Inc ...
If the Northern Division's Sales Last Year Were $600,000 Higher ...
At a Sales Volume of 40,000 Units, Lonnie Company's Total ...
Certosimo Corporation Has Provided the Following Contribution Format Income Statement ...