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. None of the above c. £346,000 d. £95,000
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 |
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. |
None of the above |
|
| c. |
£346,000 |
|
| d. |
£95,000 |
Operating Income = Gross Profit - Selling and Administrative expenses
Gross Profit = Sales - Cost of goods sold
Cost of Goods Sold = Cost of goods manufactured + Beginning inventory of Finished goods - Ending inventory of Finished goods
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