Question

The Parry Company’s breakeven point in units is 20,000. Assuming that variable costs are 30% and fixed costs are $100,000, what is the company’s projected operating income if sales are $750,000?

Answer 1

Answer:

Operating Income is $425,000

Explanation:

Sales                         = $750,000

-Variable cost (30%)  = $225,000

=Contribution            = $525,000

-Fixed Cost                = $100,000

=Operating Income   = $425,000

If sales are $750,000 the operating income will be $425,000.

Working:

Variable cost = 30%

Variable cost = 750,000 x 30%

Variable cost = $225,000