Amber Manufacturing provided the following information for last mon Sales $20,000 Variable costs 6,000 Fixed costs 2,000 Operating income $5,000 If sales double next month, what is the projected operating income? a. $10,000 b. $25,000 c. $19,000

Amber Manufacturing provided the following information for last mon Sales $20,000 Variable costs 6,000 Fixed costs 2,000 Operating income $5,000 If sales double next month, what is the projected operating income? a. $10,000 b. $25,000 c. $19,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Amber Manufacturing provided the following information for last month:
Sales
$20,000
Variable costs
6,000
Fixed costs
2,000
Operating income
$5,000
If sales double next month, what is the projected operating income?
a. $10,000
b. $25,000
c. $19,000
d. $12,000
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