Question

A company has sales of 10,000, variable costs of 6,000, and income of 800. Therefore, the company has fixed costs of _______.

1) 2,000
2) 3,000
3) 4,000
4) 5,000

Answer 1

To find the fixed costs of the company, we can use the basic profit calculation formula that relates sales, variable costs, fixed costs, and profit (income). The formula is:

Profit (Income) = Sales - Variable Costs - Fixed Costs

From this formula, if we want to find the Fixed Costs, we can rearrange it as:

Fixed Costs = Sales - Variable Costs - Profit (Income)

Let's calculate the fixed costs using the values from the question:

Sales: $10,000
Variable Costs: $6,000
Income (Profit): $800

Fixed Costs = Sales - Variable Costs - Income
Fixed Costs = $10,000 - $6,000 - $800
Fixed Costs = $4,000 - $800
Fixed Costs = $3,200

Therefore, the company has fixed costs of $3,200. Since this option is not listed among the choices provided, it appears there is an error in the options. None of the choices listed (1) $2,000, (2) $3,000, (3) $4,000, or (4) $5,000 match the correct answer of $3,200.