The following information relates to Marshall Manufacturing's current accounting period: Based on this information, what is the company's net income?
A) $40,000
B) $70,000
C) $30,000
D) $42,000

Question

The following information relates to Marshall Manufacturing's current accounting period:  Based on this information, what is the company's net income?
A) $40,000 
B) $70,000 
C) $30,000 
D) $42,000

Quizplus · Accepted Answer

Total product cost = (Materials cost + Labor costs + Overhead costs) ÷ Number of units produced
Total product cost = [$34,000 + $66,000 + ($6,000 + $4,000)] ÷ 10,000 units = $11.00 per unit
Cost of goods sold = Number of units sold × Total product cost
Cost of goods sold = 10,000 units sold × $11 per unit = $110,000
Net income = Revenue − Cost of goods sold - Selling and administrative expenses
Net income = $210,000 − $110,000 - ($50,000 + $10,000) = $40,000

The Following Information Relates to Marshall Manufacturing's Current Accounting Period