Division R reported operating income of $800,000 and total service department charges of $275,000.Therefore its:
A) net income was $1,075,000.
B) gross profit margin was $525,000.
C) operating income before service department charges was $1,075,000.
D) consolidated non operating income was $420,000.

Question

Quizplus · Accepted Answer

Total operating income before service department charges can be calculated as:

Total operating income = Operating income + Total service department charges 
Total operating income = $800,000 + $275,000 
Total operating income = $1,075,000

Therefore, option C is correct as it represents the operating income before the service department charges. The other options are incorrect as they are not related to the given information.

Division R Reported Operating Income of $800,000 and Total Service