Question

Schrute Farm Sales buys portable generators for $490 and sells them for $740. He pays a sales commission of? 5% of sales revenue to his sales staff. Mr. Schrute pays $4,000 a month rent for his? store, and also pays $2,000 a month to his staff in addition to the commissions. Mr. Schrute sold 700 generators in June. If Mr. Schrute prepares a traditional income statement for the month of? June, what would be his operating? income?

Answer 1

Schrute Farm
Income Statement
Sales Revenue ($740 x 700)		$        518,000
Less: Cost of goods sold ($490 x 700)		343,000
Gross Profit		175,000
Less: Operating Expenses
Selling Expenses(Commission at 5%)	25,900
Administrative and general expenses
Salary expense	2,000
Rent Expense	4,000
Total Operating Expenses		31,900
Operating Income		$        143,100