Operating Income Can Be Calculated By

question 39

Multiple Choice

Operating income can be calculated by:

• A)Dividing fixed costs by the contribution margin ratio.
• B)Multiplying fixed costs by the contribution margin ratio.
• C)Multiplying the margin of safety by the contribution margin ratio.
• D)Dividing the margin of safety by the contribution margin ratio.

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Definitions:

Constraint

A limitation or restriction that affects the performance or capacity of a process, system, or organization.

Profitability

The ability of a company or product to generate income over cost, leading to profit.

Mixing Machines

Equipment used in manufacturing and baking industries to blend or mix ingredients into a homogeneous substance.

Variable Cost

Costs that vary directly with the level of production output, such as materials and labor, in contrast with fixed costs, which remain constant regardless of output.