A Company Had Net Income of $2,660,000,net Sales of $25,000,000,and

question 122

Multiple Choice

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets is equal to:

• A)3.01%
• B)10.64%
• C)32.00%
• D)33.25%
• E)300.75%

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Definitions:

Net Operating Income

Income from normal business operations after subtracting operating expenses but before interest and taxes.

Fixed Manufacturing Overhead

Expenses related to manufacturing that remain constant regardless of the level of production, such as building lease payments and equipment depreciation.

Deferred Inventories

Inventory costs that are not expensed in the period they are incurred but are deferred to a future period.

Absorption Costing

This accounting practice involves adding all costs associated with production, including direct materials, labor, and both kinds of overhead expenses (variable and fixed), into the cost calculation of a product.