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### Understanding Operating Expenses #### Problem Statement: You are provided with the following financial details: - **Cost of Goods Sold (COGS):** $95,000 - **Gross Profit:** $130,000 - **Net Income:** $80,000 #### Question: What are the Operating Expenses? #### Multiple Choice Options: - $35,000 - $175,000 - $70,000 - $50,000 ##### Explanation: In order to find the Operating Expenses, we need to understand the relationship between Gross Profit, Operating Expenses, and Net Income. 1. **Gross Profit** is calculated as: \[ \text{Gross Profit} = \text{Revenue} - \text{COGS} \] Given Gross Profit and COGS, you can find Revenue, but it's not needed in this problem. 2. **Net Income** is calculated as: \[ \text{Net Income} = \text{Gross Profit} - \text{Operating Expenses} \] Rearranging this formula to solve for Operating Expenses: \[ \text{Operating Expenses} = \text{Gross Profit} - \text{Net Income} \] 3. Substitute the given values: \[ \text{Operating Expenses} = \$130,000 - \$80,000 = \$50,000 \] So, the correct answer is: - $50,000

### Understanding Operating Expenses #### Problem Statement: You are provided with the following financial details: - **Cost of Goods Sold (COGS):** $95,000 - **Gross Profit:** $130,000 - **Net Income:** $80,000 #### Question: What are the Operating Expenses? #### Multiple Choice Options: - $35,000 - $175,000 - $70,000 - $50,000 ##### Explanation: In order to find the Operating Expenses, we need to understand the relationship between Gross Profit, Operating Expenses, and Net Income. 1. **Gross Profit** is calculated as: \[ \text{Gross Profit} = \text{Revenue} - \text{COGS} \] Given Gross Profit and COGS, you can find Revenue, but it's not needed in this problem. 2. **Net Income** is calculated as: \[ \text{Net Income} = \text{Gross Profit} - \text{Operating Expenses} \] Rearranging this formula to solve for Operating Expenses: \[ \text{Operating Expenses} = \text{Gross Profit} - \text{Net Income} \] 3. Substitute the given values: \[ \text{Operating Expenses} = \$130,000 - \$80,000 = \$50,000 \] So, the correct answer is: - $50,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Understanding Operating Expenses #### Problem Statement: You are provided with the following financial details: - **Cost of Goods Sold (COGS):** $95,000 - **Gross Profit:** $130,000 - **Net Income:** $80,000 #### Question: What are the Operating Expenses? #### Multiple Choice Options: - $35,000 - $175,000 - $70,000 - $50,000 ##### Explanation: In order to find the Operating Expenses, we need to understand the relationship between Gross Profit, Operating Expenses, and Net Income. 1. **Gross Profit** is calculated as: \[ \text{Gross Profit} = \text{Revenue} - \text{COGS} \] Given Gross Profit and COGS, you can find Revenue, but it's not needed in this problem. 2. **Net Income** is calculated as: \[ \text{Net Income} = \text{Gross Profit} - \text{Operating Expenses} \] Rearranging this formula to solve for Operating Expenses: \[ \text{Operating Expenses} = \text{Gross Profit} - \text{Net Income} \] 3. Substitute the given values: \[ \text{Operating Expenses} = \$130,000 - \$80,000 = \$50,000 \] So, the correct answer is: - $50,000
Transcribed Image Text:### Understanding Operating Expenses #### Problem Statement: You are provided with the following financial details: - **Cost of Goods Sold (COGS):** $95,000 - **Gross Profit:** $130,000 - **Net Income:** $80,000 #### Question: What are the Operating Expenses? #### Multiple Choice Options: - $35,000 - $175,000 - $70,000 - $50,000 ##### Explanation: In order to find the Operating Expenses, we need to understand the relationship between Gross Profit, Operating Expenses, and Net Income. 1. **Gross Profit** is calculated as: \[ \text{Gross Profit} = \text{Revenue} - \text{COGS} \] Given Gross Profit and COGS, you can find Revenue, but it's not needed in this problem. 2. **Net Income** is calculated as: \[ \text{Net Income} = \text{Gross Profit} - \text{Operating Expenses} \] Rearranging this formula to solve for Operating Expenses: \[ \text{Operating Expenses} = \text{Gross Profit} - \text{Net Income} \] 3. Substitute the given values: \[ \text{Operating Expenses} = \$130,000 - \$80,000 = \$50,000 \] So, the correct answer is: - $50,000
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