The following is extracted from the records of a manufacturing company for last year: £ Sales 600,000 Inventory of direct materials as of 1st of January 39,000 Purchases of direct materials 158,000 Inventory of direct materials as of 31st of December 19,000 Direct manufacturing labour 28,000 Indirect manufacturing costs 45,000 Inventory of finished goods as of 1st of January 47,000 Cost of goods manufactured 121,000 Inventory of finished goods as of 31st of December 33,000 Selling and administrative costs 119,000 What is the company’s operating income? a. £177,000 b. £95,000 c. £346,000 d. None of the above
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The following is extracted from the records of a manufacturing company for last year:
£
Sales
600,000
Inventory of direct materials as of 1st of January
39,000
Purchases of direct materials
158,000
Inventory of direct materials as of 31st of December
19,000
Direct manufacturing labour
28,000
Indirect
manufacturing costs 45,000
Inventory of finished goods as of 1st of January
47,000
Cost of goods manufactured
121,000
Inventory of finished goods as of 31st of December
33,000
Selling and administrative costs
119,000
What is the company’s operating income?
a. £177,000
b. £95,000
c. £346,000
d. None of the above
we know that,
cost of goods sold = Cost of goods manufactured + Opening stock of finished goods - closing stock of finished goods
Sales - the cost of goods sold = Gross profit.
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