Fresno Home Oil Services wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Fresno Home Oil Services has the following data available.

Fresno Home Oil Services uses the high-low method to determine its operating cost equation and earns $0.50 per mile for 18,000 miles.
-What would Fresno's operating income (loss) be for a month if the company prepared a contribution margin income statement for the month?
A) $900
B) ($1,175)
C) $8,100
D) $9,000

Question

Fresno Home Oil Services wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Fresno Home Oil Services has the following data available.
  
Fresno Home Oil Services uses the high-low method to determine its operating cost equation and earns $0.50 per mile for 18,000 miles.
-What would Fresno's operating income (loss) be for a month if the company prepared a contribution margin income statement for the month?
A) $900 
B) ($1,175) 
C) $8,100 
D) $9,000

Quizplus · Accepted Answer

Fresno's operating income (loss) for a month would be ($1,175) if the company prepared a contribution margin income statement for the month because the contribution margin income statement only includes variable costs and ignores fixed costs.

Fresno Home Oil Services Wants to Determine a Fuel Surcharge