Answer: administrative costs.

## Explanation Operating income (also known as operating profit or EBIT - Earnings Before Interest and Taxes) is calculated as: **Operating Income = Gross Profit - Operating Expenses** Where operating expenses typically include: - Administrative costs - Selling expenses - Research and development costs - Depreciation and amortization **Key points:** 1. **Income taxes** are not part of operating income calculation - they come after operating income in the income statement (Operating Income → Interest Expense → Pre-tax Income → Income Taxes → Net Income). 2. **Interest charges** are financing costs, not operating expenses. They are deducted from operating income to arrive at pre-tax income. 3. **Administrative costs** are operating expenses that directly reduce operating income. A decrease in administrative costs would increase operating income. **Therefore:** - A decrease in **income taxes** would increase net income but not operating income. - A decrease in **interest charges** would increase pre-tax income and net income but not operating income. - A decrease in **administrative costs** would directly increase operating income. **Correct Answer: C** - A decrease in administrative costs most likely increases a manufacturing company's operating income.

Author: LeetQuiz .