Answer
Current annual operating income shall be worked out by deducting variable costs from revenues to find contribution margin and then deducting fixed costs to arrive at the figure of annual operating income as follows;
Work Step by Step
(W-1) : Sales : 5,000,000 units × USD 0.5 per unit = USD 2,500,000
(W-2) : Variable Costs: 5,000,000 units × USD 0.3 per unit = USD 1,500,000
