Question

cogs = 420,000 s&A = 50000 depreciation= 400000 sales = 1000000 tax rate = 25% calculate operating income and net income

Answer 1

Ans.	Operating income	$130,000
	Net income	$97,500
	*Calculations of Operating & Net income:
	Particulars	Amount
	Sales	$1,000,000
	Less: Cost of goods sold	-$420,000
	Gross margin	$580,000
	Less: Operating expenses:
	Selling & administrative expenses	-$50,000
	Depreciation	-$400,000
	Operating income (EBIT)	$130,000
	Less: Interest expenses	$0
	Earnings before tax	$130,000
	Less: Tax ($130,000 * 25%)	-$32,500
	Net income	$97,500