Question

The formula used to calculate the operating income is ________.

A) operating income = cost of goods + SGA expenses + other operating expenses
B) operating income = sales revenues + cost of goods
C) operating income = sales revenues + cost of goods + SGA expenses + other operating expenses
D) operating income = sales revenues - SGA expanses
E) operating income = sales revenues - cost of goods - SGA expenses - other operating expenses

Answer 1

The formula used to calculate the operating income is E) operating income = sales revenues - cost of goods - SGA expenses - other operating expenses.

Step-by-step explanation:

The formula used to calculate the operating income is E) operating income = sales revenues - cost of goods - SGA expenses - other operating expenses.

Operating income is a measure of a company's profitability from its core operations. It is calculated by subtracting the cost of goods sold, selling, general, and administrative (SGA) expenses, and other operating expenses from the sales revenues.

For example, if a company has sales revenues of $1,000, cost of goods sold of $500, SGA expenses of $200, and other operating expenses of $100, the operating income would be $1,000 - $500 - $200 - $100 = $200.