Question

Oliver Brush Company sells standard hair brushes. The following information summarizes Oliver​'s operating activities for 2018​:

Selling and Administrative Expenses $52,704
Purchases 73,200
Net Sales Revenue 146,400
Merchandise Inventory, January 1, 2018 10,980
Merchandise Inventory, December 31, 2018 8,052


Requirements:
a. Calculate the operating income for 2018.
b. Oliver sold 6 comma 400 brushes in 2018. Compute the unit cost for one brush.

Answer 1

Answer:

a. $17,568

b. $22.88

Explanation:

Income Statement for 2018

Net Sales Revenue                                                       $146,400

Less Cost of Goods Sold :

Opening Merchandise Inventory            $10,980

Add Purchases                                        $73,200

Less Closing Merchandise Inventory     ($8,052)       ($76,128)

Gross Profit                                                                     $70,272

Less Expenses :

Selling and Administrative Expenses                         ($52,704)

Operating Income                                                          $17,568

Unit Cost = Total Sales Revenue / Total Sales Units

                = $146,400 / 6,400

                = $22.88