Gamma-Theta is a financial software firm with gross sales of 176,000 last year. Its cost of goods sold equaled 25,685. Gamma-Theta's corporate tax rate is 35%.
If its net income after taxes was 70,279, its operating expenses were ________.
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A. B. C. D.Explanation
Gamma-Theta's pre-tax income equals 70,279/0.65 = 108,122. Now, pre-tax income = gross sales - cost of goods sold - operating expenses. Therefore, 108,122
= 176,000 - 25,685 - operating expenses. This gives operating expenses = 42,193.