A business operated at 100% of capacity during its first month, with the following results: What is the amount of the income from operations that would be reported on the variable costing income statement?
A) $18,900
B) $18,200
C) $18,000
D) $21,000

Question

A business operated at 100% of capacity during its first month, with the following results:  What is the amount of the income from operations that would be reported on the variable costing income statement?
A) $18,900 
B) $18,200 
C) $18,000 
D) $21,000

Quizplus · Accepted Answer

Using the formula for computing income from operations under variable costing:
Sales - Variable expenses = Contribution margin
Contribution margin - Fixed expenses = Income from operations

Sales = 53,000
Variable expenses = 22,200
Fixed expenses = 12,600

53,000 - 22,200 = 30,800
30,800 - 12,600 = 18,200

Therefore, the answer is choice B, $18,200.

A Business Operated at 100% of Capacity During Its First