Use the following information to answer the question:
Sales for 2000 are projected to be $25,000; The firm currently uses straight line depreciation; No new equipment purchases are planned for 2000; There will be a 100% earnings distribution for 2000. The current assets, accounts payable, and accrued expenses vary at a constant percent of sales as do COGS and selling expenses. Assume that notes payable is paid off in 2000.
-Operating Income for 2000 is projected to be:
A) $7,625
B) $7,125
C) $6,750
D) $4,575

Question

Use the following information to answer the question:
   Sales for 2000 are projected to be $25,000; The firm currently uses straight line depreciation; No new equipment purchases are planned for 2000; There will be a 100% earnings distribution for 2000. The current assets, accounts payable, and accrued expenses vary at a constant percent of sales as do COGS and selling expenses. Assume that notes payable is paid off in 2000.
-Operating Income for 2000 is projected to be:
A) $7,625 
B) $7,125 
C) $6,750 
D) $4,575

Quizplus · Accepted Answer

Operating Income = Sales - Cost of Goods Sold - Operating Expenses= $12,500 - $4,875 - $0= $7,625

Use the Following Information to Answer the Question