Clay Earth Company sells ceramic pottery at a wholesale price of $5 per unit.The variable cost of manufacture is $2.50 per unit.The fixed costs are $6200 per month.It sold 5700 units during this month.Calculate Clay Earth's operating income (loss)for this month.

Question

Quizplus · Accepted Answer

Total revenue = 5700 x $5 = $28,500
Total variable cost = 5700 x $2.50 = $14,250
Total fixed cost = $6200
Operating income = Total revenue - Total variable cost - Total fixed cost = $28,500 - $14,250 - $6200 = $8050. Therefore, the answer is B.

Clay Earth Company Sells Ceramic Pottery at a Wholesale Price