A company is in its first year of operation. When materials, labor, and overhead are combined, the company estimates $$42$ million for the total cost of goods sold. The company projects sales of S$8$ million. Selling and administrative expenses are $$2$ million, and each item costs $$20$ to make.

How many items does the company need to produce to end up with $10,000$ items in ending inventory?

$190,000$

$200,000$

$210,000$

$220,000$

An individual was hired to construct a budget for a profitable factory. The individual took notes as the CEO explained how the financial statements were to be analyzed. The notes include the following numbers:

Sales $$1,000,000$

Cost of goods sold $$600,000$

Selling expenses $$250,000$

The CEO also seemed concerned about the high level of debt the company had and the $$80,000$ of interest expenses.

What is the gross margin and net operating income?

Gross margin is $$400,000$; net operating income is $$70,000.$

Gross margin is $$400,000$; net operating income is $$400,000$

Gross margin is $$400,000$; net operating income is $$150,000$

Gross margin is $$150,000,$ net operating income is $$70,000$