If the selling price per unit of a product is $30, variable costs per unit are $20, and total fixed costs are $10,000 and a company sells 5,000 units, operating income would be $40,000.

Question

Quizplus · Accepted Answer

To calculate the operating income, we need to use the following formula:
Operating Income = (Selling Price per Unit * Number of Units Sold) - (Variable Cost per Unit * Number of Units Sold) - Total Fixed Costs

Using the given figures, we can substitute the values in the formula as follows:

Operating Income = ($30 * 5,000) - ($20 * 5,000) - $10,000
Operating Income = $150,000 - $100,000 - $10,000
Operating Income = $40,000

Therefore, the statement is true and the answer is A.

If the Selling Price Per Unit of a Product Is