Zertrax,Inc.reports the following information for July: $$\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 1,000,000 \
\hline \text { Variable Costs } & 170,000 \
\hline \text { Operating Income } & 320,000 \
\hline
\end{array}$$ What is the total fixed cost using variable costing?
A) $830,000
B) $510,000
C) $150,000
D) $490,000

Question

Zertrax,Inc.reports the following information for July: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 1,000,000 \
\hline \text { Variable Costs } & 170,000 \
\hline \text { Operating Income } & 320,000 \
\hline
\end{array}$$ What is the total fixed cost using variable costing?
A) $830,000
B) $510,000
C) $150,000
D) $490,000

Quizplus · Accepted Answer

Fixed costs can be calculated using the formula: Fixed Costs = Operating Income + Variable Costs - Sales Revenue. Plugging in the numbers from the table: Fixed Costs = $320,000 + $170,000 - $1,000,000 = $490,000. However, the correct calculation should be Fixed Costs = Sales Revenue - Variable Costs - Operating Income, which gives Fixed Costs = $1,000,000 - $170,000 - $320,000 = $510,000. The error in explanation was in the formula structure, but the correct answer based on the proper calculation is $510,000.

Zertrax,Inc What Is the Total Fixed Cost Using Variable Costing? A)

Zertrax,Inc What Is the Total Fixed Cost Using Variable Costing?
A)