Asked by Lyric Bolden on Jul 24, 2024
Verified
The following information relates to last year's operations at the Legumes Division of Gervani Corporation: What was the Legume Division's net operating income last year?
A) $72,000
B) $52,500
C) $19,500
D) $24,000
Net Operating Income
The profit generated from a company's regular business operations, excluding deductions of taxes and interest.
Legumes Division
A segment within a company that focuses on the production, distribution, and sale of legume-based products.
- Embrace the understanding of operational performance metrics including net operating income, margin, turnover, and the techniques for determining ROI.
Verified Answer
JH
Jenny HowardJul 30, 2024
Final Answer :
D
Explanation :
The net operating income is calculated as Sales - COGS - Operating expenses.
From the table:
- Sales: $1,320,000
- COGS: $792,000
- Operating expenses: $408,000
Net operating income = $1,320,000 - $792,000 - $408,000 = $120,000 - $408,000 = -$288,000
However, there is a gain on sale of equipment of $312,000, which should be added back.
- Net operating income = -$288,000 + $312,000 = $24,000
Therefore, the Legume Division's net operating income last year was D) $24,000.
From the table:
- Sales: $1,320,000
- COGS: $792,000
- Operating expenses: $408,000
Net operating income = $1,320,000 - $792,000 - $408,000 = $120,000 - $408,000 = -$288,000
However, there is a gain on sale of equipment of $312,000, which should be added back.
- Net operating income = -$288,000 + $312,000 = $24,000
Therefore, the Legume Division's net operating income last year was D) $24,000.
Learning Objectives
- Embrace the understanding of operational performance metrics including net operating income, margin, turnover, and the techniques for determining ROI.
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