Question

When combined punishments require both NAVPERS 1070/607 and NAVPERS 1070/613 entries, prepare both.

a.True
b.False

Answer 1

The given statement "The operating income, calculated using the given formula, is $190,000." is (a)True .

Step-by-step explanation:

The operating income is determined by the formula
`: \[ \text{Operating Income} = (Q * (SP - VC)) - FC \]`

Where:

- Q is the quantity of units sold,

-SP is the selling price per unit,

- VC is the variable cost per unit, and

- FC is the fixed cost.

Given the information:

- Q = 7,000,000units,

- SP = $0.40 per unit,

- VC = $0.27 per unit, and

- FC = $720,000

Substituting these values into the formula, we get:

`\[ \text{Operating Income} = (7,000,000 * ($0.40 - $0.27)) - $720,000 \]`

Solving the expression within the parentheses:

`\[ = (7,000,000 * $0.13) - $720,000 \]`

Multiplying and subtracting further:

`\[ = $910,000 - $720,000 \]`

Finally:

`\[ = $190,000 \]`

Thus, the operating income is $190,000. This means that after considering the new fixed costs, selling price, variable costs, and units sold, the business is left with an operating income of $190,000. This figure is crucial for assessing the financial health and profitability of the business in light of the changes made.