Alpha Inc.operated at 75% of capacity for the past year during which fixed costs were $225,000,variable costs were 70% of sales,and sales were $850,000.Operating profit was:

Question

Quizplus · Accepted Answer

Operating profit is calculated as sales minus total costs (fixed and variable). Variable costs are 70% of sales, so they are $595,000 (70% of $850,000). Total costs are $595,000 (variable) + $225,000 (fixed) = $820,000. Operating profit is $850,000 (sales) - $820,000 (total costs) = $30,000.

Alpha IncOperated at 75% of Capacity for the Past Year During