How do you calculate return above total operating cost?

• A. production minus total costs
• B. total costs minus production
• C. revenue minus taxes
• D. operating costs minus fixed costs

Answer: (A)

The main idea is profit: what you earn from production after paying all costs. Return above total operating cost is found by taking the revenue generated from production and subtracting the total costs tied to that production (both fixed and variable). This difference shows how much is left over after covering everything needed to operate.

So, revenue minus total costs gives the return above total operating cost. Subtracting production from costs would flip the sign and isn’t the profit measure. Using taxes would focus on after‑tax money rather than operating costs. Subtracting fixed costs from operating costs would leave variable costs, not profit.