What Would Target Operating Income Be When Fixed Costs Equal

question 72

Multiple Choice

What would target operating income be when fixed costs equal $6,000, unit contribution margin equals $40.00, and the number of units equals 400?

• A)$6,000
• B)$10,000
• C)$16,000
• D)$20,000
• E)$60,000

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Definitions:

Producer Surplus

The contrast between what is an acceptable amount for producers for a good or service and the actual amount they are paid.

Marginal Cost

The extra expenditure linked to producing one more unit of a product or service.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Overproduction

The condition where production exceeds the demand, leading to surplus inventory, lower prices, and potential economic inefficiencies.