Question

Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000. Rogue's operating income is equal to

Answer 1

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Correct Answer = Rogue's operating Income is $1,180,000

Working:

Operating Income = Gross Income - Operating Expense

Here, Gross Income = Sales - Cost of Goods sold

Operating Expense = Depreciation Expense + Administrative Expenses

Parameters provided in the question,

• Sales = $3,000,000
• Cost of Goods Sold = $1,500,000
• Depreciation Expense = $170,000
• Administrative Expenses = $150,000

Substituting the values in the formula,

Gross income = $3,000,000 - $1,500,000

Gross income = $1,500,000

Operating Expense = $170,000 + $150,000 = $ 320,000

Therefore,

Operating Income = $1,500,000 - $320,000

Operating Income = $1,180,000

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