Use the table for the question(s)below.
Consider the following income statement and other information:

-Luther's Operating Margin for the year ending December 31, 2011 is closest to:
A)0.5%
B)0.7%
C)5.4%
D)6.8%

Question

Use the table for the question(s)below.
Consider the following income statement and other information:
 
-Luther's Operating Margin for the year ending December 31, 2011 is closest to:
A)0.5% 
B)0.7% 
C)5.4% 
D)6.8%

Quizplus · Accepted Answer

Operating margin = Operating Income / Total Revenue
Operating Income = Gross Profit - Operating Expenses 
Operating Margin = (Gross Profit - Operating Expenses) / Total Revenue
Operating Income = $1,100,000 - $350,000 = $750,000
Operating Margin = ($750,000 / $13,900,000) x 100% = 5.4% (rounded to one decimal place)

Use the Table for the Question(s)below