Indiana Hot Tubs,Inc.reports the following information for August: $$\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 770,000 \
\hline \text { Variable Costs } & 220,000 \
\hline \text { Fixed Costs } & 73,000 \
\hline
\end{array}$$ Calculate the operating income for August using variable costing.

Question

Indiana Hot Tubs,Inc.reports the following information for August: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 770,000 \
\hline \text { Variable Costs } & 220,000 \
\hline \text { Fixed Costs } & 73,000 \
\hline
\end{array}$$ Calculate the operating income for August using variable costing.

Quizplus · Accepted Answer

Operating income under variable costing is calculated by subtracting both variable costs and fixed costs from sales revenue. Thus, $770,000 (Sales Revenue) - $220,000 (Variable Costs) - $73,000 (Fixed Costs) = $477,000.

Indiana Hot Tubs,Inc Calculate the Operating Income for August Using Variable Costing