Steve's Music Supply Has a Return on Equity of 19

question 47

Multiple Choice

Steve's Music Supply has a return on equity of 19.3 percent, a profit margin of 10.1 percent, and total equity of $645,685. What is the net income?

• A)$65,214.19
• B)$123,383.71
• C)$124,617.21
• D)$65,214.19.
• E)$125,863.40

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Definitions:

Absorption Costing

A method of accounting that encompasses the total manufacturing expenses – encompassing direct materials, direct labor, as well as both variable and fixed overhead costs – within the product's cost.

Variable Costing

An accounting method that only considers variable costs in product pricing and decision making.

Fixed Overhead Expensed

The practice of charging fixed overhead costs to the income statement in the period they are incurred, rather than allocating them to products.

Inventories

Properties or goods meant for selling in regular business activities, under production for sale, or as resources and supplies for consumption during the production phase or while delivering services.