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EB3.
LO 2.1Flip or Flop is a retail shop selling a wide variety of sandals and beach footwear. In 2019, they had gross revenue from sales totaling $93,200. Their operating expenses for this same period were $34,000. If their Cost of Goods Sold (COGS) was 21% of gross revenue, what was their net operating income for the year?

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Answer:

Their net operating income for the year was $39,628

Explanation:

Flip or Flop's net operating income for the year = Gross revenue - Cost of Goods Sold - Operating expenses

Their Cost of Goods Sold (COGS) was 21% of gross revenue, therefore:

Cost of Goods Sold = 21% x $93,200 = $19,572

The company has operating expenses for this same period of $34,000.

Net operating income for the year = $93,200 - $19,572 - $34,000 = $39,628

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