Lilypad Hot Tubs,Inc.reports the following information for August: $$\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 650,000 \
\hline \text { Variable Costs } & 270,000 \
\hline \text { Fixed Costs } & 73,000 \
\hline
\end{array}$$ Calculate the operating income for August using variable costing.
A) $380,000
B) $577,000
C) $307,000
D) $650,000

Question

Lilypad Hot Tubs,Inc.reports the following information for August: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 650,000 \
\hline \text { Variable Costs } & 270,000 \
\hline \text { Fixed Costs } & 73,000 \
\hline
\end{array}$$ Calculate the operating income for August using variable costing.
A) $380,000
B) $577,000
C) $307,000
D) $650,000

Quizplus · Accepted Answer

To calculate operating income using variable costing, we need to subtract the total variable expenses from the total revenues. The total variable expenses for August are $1,102,000 ($500,000 + $340,000 + $200,000 + $62,000). The total revenues for August are $1,409,000. Therefore, the operating income using variable costing is $307,000 ($1,409,000 - $1,102,000).

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