Clapton Inc. would like to prepare an income statement for March. Their production department records show that total product costs in March were $225,000 when 50,000 units were produced. Their sales department records show that 46,000 units were sold for $16 each. Monthly administrative and marketing expenses totaled $60,000. What should be net operating income for March? (Ignore taxes)

Question

Quizplus · Accepted Answer

To calculate net operating income, first calculate total sales revenue: 46,000 units x $16 = $736,000. Then, calculate the cost of goods sold (COGS) per unit: $225,000 / 50,000 units = $4.50 per unit. COGS for 46,000 units sold = 46,000 x $4.50 = $207,000. Subtract COGS and administrative/marketing expenses from sales revenue: $736,000 - $207,000 - $60,000 = $469,000.