A firm operated at 90% capacity for the past year, during which fixed costs were $320,000, variable costs were 60% of sales, and sales were $1,000,000.
Income from Operations was:
Methods for Costing:
There are many methods have been developed for finding the cost of goods produced i.e. traditional costing method, absorption-based costing, and variable costing. Each method has different uses which are applied according to the production process developed by the companies.
Answer and Explanation:
The correct answer is option (b).
Income from Operations was $80,000.
Explanation: Income from Operations was $80,000 ($1,000,000 - $1,000,000 x 60% - $320,000), which has been computed byd deducting the variable costs and the fixed cost from the sales revenue.
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from Financial Accounting: Help and ReviewChapter 13 / Lesson 5