Jupiter Inc.reports the following information for August: Calculate the operating income for August using variable costing.
A)$625,000
B)$450,000
C)$525,000
D)$420,000

Question

Jupiter Inc.reports the following information for August:  Calculate the operating income for August using variable costing.
A)$625,000 
B)$450,000 
C)$525,000 
D)$420,000

Quizplus · Accepted Answer

To calculate operating income under variable costing, we need to subtract variable expenses (cost of goods sold and variable selling and administrative expenses) from the revenue. Looking at the given information, we have:

Revenue: $2,000,000
Less variable expenses:
- Cost of goods sold: $800,000
- Variable selling and administrative expenses: $600,000

Operating income under variable costing = Revenue - Variable expenses
= $2,000,000 - $800,000 - $600,000
= $600,000

Therefore, the correct option is C) $525,000 as this is the closest option to the calculated operating income under variable costing.