Question

During the past year, the company’s financial results reflected the following: Selling, general, and administrative expenses of 200,000 Net sales of 1,200,000 Interest expense of 100,000 Research & development expense of 50,000 Cost of goods sold of 800,000 Income tax expense of 17,500 Calculate operating income $ for the year.

Answer 1

Answer:

Operating Income                     $ 200,000

Explanation:

The Company’s Income STatement

Net sales  $ 1,200,000

Cost of goods sold of 800,000

Gross Profit  $ 400,000

Selling, general, and administrative expenses of 200,000

Operating Income                     $ 200,000

Research & development expense of 50,000

Income before Income Tax           $ 150,000

Income tax expense 17,500

Net Income             $ 132,500

The operating income does not include other expenses such as Research & development expenses  and income tax.