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Artisan Inspiration, Inc. is a merchandiser of stone ornaments. The company sold 8000 units during the year. The company has provided the following information:
Sales Revenue $593,000
Purchases (excluding Freight In) 304,000
Selling and Administrative Expenses 68,000
Freight In 14,000
Beginning Merchandise
Inventory 46,000
Ending Merchandise Inventory 42,000
What is the operating income for the year? (Round your answer to the nearest whole dollar.)
A) $203,000
B) $271,000
C) $322,000
D) $525,000

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Answer:

Net operating income= $203,000

Explanation:

First, we need to calculate the cost of goods sold:

COGS= beginning finished inventory + cost of goods purchased - ending finished inventory

COGS= 46,000 + (304,000 + 14,000) - 42,000

COGS= $322,000

Now, we can determine the net operating income using the following formula:

Net operating income= sales - cogs - Selling and Administrative Expenses

Net operating income= 593,000 - 322,000 - 68,000

Net operating income= $203,000

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