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27 June, 20:00

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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  1. 27 June, 21:37
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    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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