Assume sales of $10,000, variable costs of $7,000, and fixed costs of $2,000.Calculate contribution margin and operating income.
A)Contribution margin = $3,000; Operating income = $1,000
B)Contribution margin = $5,000; Operating income =$1,000
C)Contribution margin = $8,000; Operating income = $1,000
D)Contribution margin = $6,000; Operating income = $1,000

Question

Quizplus · Accepted Answer

Contribution margin is calculated as sales minus variable costs, so $10,000 - $7,000 = $3,000. Operating income is calculated as contribution margin minus fixed costs, so $3,000 - $2,000 = $1,000. Therefore, the answer is A.

Assume Sales of $10,000, Variable Costs of $7,000, and Fixed