Question

A-Rod Fishing Supplies had sales of \(2,500,000 and cost of goods sold of \)1,710,000. Selling and administrative expenses represented 10 percent of sales. Depreciation was 6 percent of the total assets of $4,680,000. What was the firm’s operating profit?

Short answer

The operating profit of A-Rod fishing supplies: $259,200

Step-by-step solution

Given are the following amounts 

Particulars	Amount ($)
Sales	2,500,000
Cost of goods sold	1,710,000
Selling and administrative expense (10% of sales)	250,000
Depreciation (6% of $4,680,000)	280,800

Calculation of the firm’s operating profit

$$\begin{gathered} Operatingprofit=Sales-Costofgoodssold-Sellingandadministrativeexpense-Depreciation \\ =\$2,500,000-\$1,720,000-\$250,000-\$280,800 \\ =\$259,200 \end{gathered}$$