Given a contribution margin of $16,700 per unit and an increase in units sold by 20, what is the resulting change in operating income under variable costing?

Multiple choice question for Capacity Analysis and Inventory Costing. Select an option, then review the explanation below.

Explanation

The change in operating income under variable costing is calculated by multiplying the contribution margin per unit by the change in quantity sold. Here, $16,700 multiplied by 20 units equals $334,000, which corresponds to option D.

Practice related questions from the same subject.

1.What term describes the operational capacity that is below the theoretical maximum capacity?
2.Under the Variable Costing approach, how are fixed manufacturing overhead costs handled during the accounting period?
3.What does the denominator represent in the fixed manufacturing cost rate calculation?
4.Which of the following is used to determine product capacity, cost analysis, performance assessment, and compliance with regulations?
5.In absorption costing, which format does the income statement typically use?

Given a contribution margin of $16,700 per unit and an increase in units sold by 20, what is the resulting change in operating income under variable costing?

Explanation

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