A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Income (loss) from operations was

Question

BlackTom AI · Accepted Answer

We need to evaluate the cost behavior and profitability given the sales and cost structure.
First, determine variable costs: they are 70% of sales, and sales are $1,000,000, so variable costs = 0.70 × 1,000,000 = $700,000.
Next, fixed costs are stated as $330,000, and these do not change with the level of output within the relevant range.
Now compute operating income (loss): Sales minus variable costs minus fixed costs = 1,000,000 − 700,000 − 330,000.
Performing the arithmetic: 1,000,000 − 700,000 = 300,000; 300,000 − 330,000 = −30,000.
Therefore, income from operations is a loss of $30,000.
Review the answer choices: $670,000 would imply misallocating costs or misreading variable/fixed splits; $140,000 and $370,000 are not consistent with the given cost structure; $(30,000) matches the calculated loss.
The negative result reflects that fixed costs exceed the contribution margin (sales minus variable costs) at the given sales level, yielding a operating loss rather than a profit.

A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Income (loss) from operations was

View Explanation

Log in for full answers

Similar Questions

Question at position 12 What is the operating income for 2020? $36,000$49,000$62,000$73,000题目解析

Question at position 11 What is operating income for 2020? $110,000$125,000$199,000$140,000题目解析

Question at position 12 What is the operating income for 2020? $36,000$49,000$62,000$73,000题目解析

Question at position 11 What is operating income for 2020? $110,000$125,000$199,000$140,000题目解析

Carol's Dolls has fixed operating costs of $25,000. Its sale price is $60 per doll, and its variable operating cost is $30 per doll. It sells 3,000 dolls per month. The firm's earnings before interest and taxes for the month is ________.

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler