The following information relates to Marshall Manufacturing's 2013 accounting period: $\begin{array}{lr}
\text { Raw materials used } & \$ 34,000 \
\text { Direct labor wages } & 66,000 \
\text { Sales salaries and commissions } & 50,000 \
\text { Depreciation on production equipment } & 6,000 \
\text { Rent on manufacturing facilities } & 4,000 \
\text { Administrative supplies and utilities } & 10,000 \
\text { Sales revenue } & 210,000 \
\text { Units produced } & 10,000 \
\text { Units sold } & 10,000
\end{array}$ Based on this information, what is the company's net income for 2013?
A) $40,000
B) $70,000
C) $30,000
D) $42,000

Question

The following information relates to Marshall Manufacturing's 2013 accounting period: $\begin{array}{lr}
\text { Raw materials used } & \$ 34,000 \
 \text { Direct labor wages } & 66,000 \
\text { Sales salaries and commissions } & 50,000 \
\text { Depreciation on production equipment } & 6,000 \
 \text { Rent on manufacturing facilities } & 4,000 \
 \text { Administrative supplies and utilities } & 10,000 \
\text { Sales revenue } & 210,000 \
 \text { Units produced } & 10,000 \
 \text { Units sold } & 10,000
\end{array}$ Based on this information, what is the company's net income for 2013?
A) $40,000
B) $70,000
C) $30,000
D) $42,000

Quizplus · Accepted Answer

Net income is calculated as sales revenue minus expenses. In this case, sales revenue is $210,000 and expenses are $34,000 (raw materials used) + $66,000 (direct labor wages) + $50,000 (sales salaries and commissions) + $6,000 (depreciation on production equipment) + $4,000 (rent on manufacturing facilities) + $10,000 (administrative supplies and utilities) = $170,000. Therefore, net income is $210,000 - $170,000 = $40,000.

The Following Information Relates to Marshall Manufacturing's 2013 Accounting Period