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○ = operating income / revenues<br />

32. Steps:<br />

Pg. 23<br />

Sarah Allison Takash<br />

<strong>ACC</strong> <strong>350</strong>, Spring 2018<br />

<strong>Exam</strong> 1 <strong>Study</strong> <strong>Material</strong><br />

a. Determine ​total product​ revenues​ ​attributable to the particular product<br />

i. = “net sales”<br />

ii. = price * qty sold - returns and sales allowances<br />

b. Determine the ​total ​product-cost<br />

i. = Cost of all value chain activities associated with providing the product<br />

ii. = COGS + indirect/period/SG&A costs allocated to the product<br />

iii. = COGS + operating costs ---- (on income statement)<br />

c. Using (a) and (b), Determine ​the product’s ​operating income​:<br />

i. Subtract total product-cost from total product-revenues to get the product’s<br />

operating income<br />

ii. = (product-operating income) = (total product-revenue) - (total product-cost)<br />

d. Divide total revenues (step a) by operating income (step b)<br />

i. = (Total product-revenue) ​/​ (product-operating income)<br />

e. Multiply by 100 to ​get a %​ → this is your​ operating profit margin<br />

<strong>Exam</strong>ple Problem from textbook:

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