The following information relates to last year's operations at the Legumes Division of Gervani Corporation: What was the Legume Division's net operating income last year?
A) $72,000
B) $52,500
C) $19,500
D) $24,000

Question

The following information relates to last year's operations at the Legumes Division of Gervani Corporation:  What was the Legume Division's net operating income last year?
A) $72,000 
B) $52,500 
C) $19,500 
D) $24,000

Quizplus · Accepted Answer

The net operating income is calculated as Sales - COGS - Operating expenses.

From the table: 
- Sales: $1,320,000 
- COGS: $792,000 
- Operating expenses: $408,000

Net operating income = $1,320,000 - $792,000 - $408,000 = $120,000 - $408,000 = -$288,000

However, there is a gain on sale of equipment of $312,000, which should be added back. 
- Net operating income = -$288,000 + $312,000 = $24,000

Therefore, the Legume Division's net operating income last year was D) $24,000.

The Following Information Relates to Last Year's Operations at the Legumes