Homework Answers
The variable costs changes with the changes in the sales amount but the fixed costs remains same at various sales level.
Here the sales is reduced to half in next month which means the variable costs will also be reduced with half.
So operating income = Revised sales - Revised variable cost - Fixed cost.
Operating income = $ 12500 - $ 5000 - $ 3000
Thus projected operating income = $ 4,500.
Thus the correct Option is-------------A i.e $ 4,500.
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