$1 is the operating income of division a.
15 − $5 − $6 = $4, then $4 - $3 = $1
What is operating income?
- A company's operating income is its total revenue after deducting depreciation and all operating expenses. The expenses incurred to keep the business running are known as operational costs, also referred to as operating costs.
- Consider that ABC Company earned $350,000 in sales this past year. For the time period, the cost of goods sold was $50,000, rent was $15,000, maintenance costs were $3,000, insurance was $5,000, and the net pay for the employees was $50,000.
- Operating income for the business totals $227,000. Deducting operating expenses from gross profit yields operating income. Operating expenses, like selling, administrative, or general costs, are naturally ongoing costs incurred to run a business.
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