Bagwell's Net Income for the Year Ended December 31,Year 2

question 18

Multiple Choice

Bagwell's net income for the year ended December 31,Year 2 was $185,000.Information from Bagwell's comparative balance sheets is given below.Compute the cash received from the sale of its common stock during Year 2.

• A)$185,000.
• B)$106,000.
• C)$95,000.
• D)$50,000.
• E)$145,000.

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Definitions:

Break-Even Point

The level of production or sales at which total revenues equal total costs, resulting in no net loss or gain.

Contribution Margin Ratio

A ratio that shows the contribution margin as a percentage of total sales, indicating how much of the revenue is available to cover fixed costs and generate profit.

Fixed Expenses

Expenses that do not fluctuate with changes in production volume or sales, such as rent and salaries.

Variable Expenses

Costs that change in proportion to the level and nature of business activity, such as advertising, sales commissions, and shipping costs.