Question

Sales revenue $440,000 Advertising expense 60,000 Interest expense 10,000 Salaries expense 55,000 Utilities expense 25,000 Income tax expense 45,000 Cost of goods sold 180,000 What is operating income

Answer 1

Answer:

Lake's operating income is $120000

Explanation:

Operating income is the income generated by the operations of company less its operating cost. Another name that is used for operating income is Earnings before interest and tax (EBIT). The charges or income relating to non operating or financing activities is not included in the operating income and nor is the tax deduction included.

The formula for operating income = Sales - Cost of Sales - operating expenses.

The operating expenses here, are = Advertising + Salaries + Utilities

Thus, operating expenses = 60000 + 55000 + 25000 = $140000

The Operating Income = 440000 - 180000 - 140000 = $120000