Reference no: EM132565291

Steam Corporation has the following managerial perspective of profitability for the current month:

Revenues                              $10,000

Variable Costs

Direct Materials (Variable)         $1,000

Direct Labor (Variable)             $1,000

Variable Overhead                      $500

Variable Operating Expenses        $1,000

Contribution Margin                     $6,500

Fixed Overhead                            $1,500

Fixed Operating Expenses                $3,000

Profit                                              $2,000

Gina, a manager at Steam Corp., is preparing a profitability report for the lending officer at Steam Corp's bank.

Question 1: Using the provided information, which of the following statements are true about the financial perspective? (Check all that apply.)

Option 1: Total cost of goods sold will be $8,000.

Option 2: Gross margin will be $7,500.

Option 3: Gross margin will be $6,000.

Option 4: Profit will be $6,000.