Question

[Units sold x (Selling Price - Variable Costs)] - Fixed Costs = Operating Income

[5,000,000 x ($0.50 - $0.30)] - $900,000 = $100,000

Operating Income = $100,000

Answer 1

The subject is Business and it is suited for College level students. The formula provided represents the calculation of operating income in a business context. It is used to determine the profit generated from sales after deducting all costs.

Step-by-step explanation:

The subject of this question is Business and it is suited for College level students. The formula provided represents the calculation of operating income in a business context. Operating income is the profit generated from the sales of products or services after deducting all variable and fixed costs.

In the given example, the formula is used to calculate the operating income by multiplying the number of units sold by the difference between the selling price and the variable costs. The result is then subtracted by the fixed costs.

By using this formula, the operating income can be determined, and it is an important metric for evaluating the financial performance of a business.