Question

Calculate operating profit. Sales 1,535.0 Debt balance 450.0 Interest rate on debt 4.0% Cost of inventory sold 159.0 Depreciation expense 100.0 Support staff expenses 190.0 Tax expense 140.0 Interest income 10.0 Accounts receivable 20.0 Amortization expense 25.0

Select one: 1,053.0 1,081.0 1,220.0 1,061.0

Answer 1

Answer)

Calculation of operating Profit

	Amount
Sales	1,535
Less: Expenses
Cost of Inventory Sold	159
Depreciation expense	100
Support Staff Salaries	190
Amortization expense	25
Net Operating Profit	1,061

Therefore the operating profit of the company is $ 1,061.

Notes:

· Operating profit is income before interest and taxes. Thus interest expense and tax expense has not been deducted from sales revenue.

· Interest income is a non-operating income and thus has been excluded from the calculation of operating profit.