If an Organization Wants to Make a Profit,it Must Generate

question 37

Multiple Choice

If an organization wants to make a profit,it must generate more sales revenue than the total costs it incurs.Which of the following is not a correct expression of the profit equation?

• A)Operating income = Sales revenue - Total variable costs - Total fixed costs
• B)Operating income = Sales revenue - Discretionary costs - Fixed costs
• C)Operating income = [Sales price per unit – Variable cost per unit x # units sold] – Fixed cost
• D)Operating income = [Contribution margin per unit x # units sold] – Fixed costs

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Definitions:

Small Corporations

These are businesses that are smaller in size, often categorized by fewer employees or lower annual revenue.

Income

The flow of cash or its equivalent received from work or investments over time.

Investment

The allocation of resources, usually financial, to assets or projects expected to generate future profits or benefits.

Exxon-Mobil

An American multinational oil and gas corporation that was formed by the merger of Exxon and Mobil in 1999, one of the largest publicly traded oil and gas companies by market capitalization.