Blake knows that he cannot pass the entire increase on to his customers, but thinks he can pass on half of the 10% increase while suffering only a 10% decrease in units sold. Calculate the operating income? (Round per unit to 2 decimal places and final answers to 0 decimal places, e.g. 5,275.)
What is Total Revenue?
- The first section of the income statements shows all the money your company brought in during the accounting period. This can be from your primary source of income, as well as any other sources of income. Don’t forget that what you “recognize” as revenue will depend on your accounting method.
- Cost of Goods Sold: Also known as COGS, this section breaks down how much it cost to produce the things you sold during this accounting period. Anything that’s vital to the production of your product (Think staff, software, materials, etc.) belongs here. When you subtract COGS from Revenue, you get Gross Profit.
- Operating Expenses: Unlike COGS, this section includes everything you spent to operate your business over the accounting period. These costs are not essential to the production of what you sold. It includes things like marketing costs, office snacks, rent, etc. When you subtract Operating Expenses from Gross Profit, you get Net Income (or what most people would just call “profit”.
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