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

Operating Income is $425,000

Step-by-step 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