It costs Homer's Manufacturing $0.75 to produce baseballs and Homer sells them for $4.00 a piece.Homer pays a sales commission of 5% of sales revenue to his sales staff.Homer also pays $12,000 a month rent for his factory and store,and also pays $75,000 a month to his staff in addition to the commissions.Homer sold 67,500 baseballs in June.If Homer prepares a traditional income statement for the month of June,what would be his operating income?

Question

Quizplus · Accepted Answer

D)
Sales $4 × 67,500 = $270,000
Less: Cost of Goods Sold $ 0.75 × 67,500 = $ 50,625
Gross Profit $219,375
Commission $275,000 × 5% = $ 13,500
Rent $ 12,000
Salaries $ 75,000
Operating Income $118,875

It Costs Homer's Manufacturing $0