Atwood Dairy Bar sells its famous soft-serve ice cream cones near a marina and resort area. The owner, Theresa, wants to determine the cost behaviour patterns to help planning for the next summer season. She has the following information available about the operating costs and the number of soft-serve cones served.

Theresa uses the high-low method to determine the operating cost equation and sells 8,000 cones in a month for $2.00 each.
-What would the operating income be at Atwood Dairy Bar if the owner prepared a contribution margin income statement for that month?
A) $14,000
B) $2,000
C) $16,000
D) $10,425

Question

Atwood Dairy Bar sells its famous soft-serve ice cream cones near a marina and resort area. The owner, Theresa, wants to determine the cost behaviour patterns to help planning for the next summer season. She has the following information available about the operating costs and the number of soft-serve cones served.
  
Theresa uses the high-low method to determine the operating cost equation and sells 8,000 cones in a month for $2.00 each.
-What would the operating income be at Atwood Dairy Bar if the owner prepared a contribution margin income statement for that month?
A) $14,000 
B) $2,000 
C) $16,000 
D) $10,425

Quizplus · Accepted Answer

Operating income is calculated by subtracting all operating expenses, including cost of goods sold (COGS) and other operating expenses, from the gross revenue. Without specific numbers from Atwood Dairy Bar's financials, it's impossible to accurately determine the operating income. However, given that D is the selected answer, it implies that there was enough information provided previously to calculate $10,425 as the operating income.

Atwood Dairy Bar Sells Its Famous Soft-Serve Ice Cream Cones