Relevant Account Balances for Martinez Corporation Are $\underline{\text { Income information for } 2017}$

question 37

Multiple Choice

Relevant account balances for Martinez Corporation are:
$\begin{array}{lrr}&12/31/17&1/01/17\\\text { Accounts receivable } & \$ 18,000 & \$ 14,000 \\\text { Inventory } & 24,000 & 26,000 \\\text { Prepaid insurance } & 1,500 & 2,100 \\\text { Accounts payable } & 25,000 & 26,000\end{array}$

$\underline{\text { Income information for } 2017}$
$\begin{array}{l}\text { Revenue } &&\$120,000\\\text { Cost of goods sold } & \$ 60,000 \\\text { Insurance expense } & 6,000 \\\text { Operating expenses } & 18,000 \\\text { Depreciation } &\underline{ 10,000}&\underline{94,0000} \\\text { Net income }&&\underline{\$26,000}\end{array}$
How much is Martinez's cash flows from operations for 2017?

• A)$28,400
• B)$38,400
• C)$23,600
• D)$33,600

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Definitions:

Marginal Revenue Product

The increased earnings resulting from the utilization of one more production factor unit.

Profit-maximizing

The process of adjusting the production and sale of goods and services to achieve the highest possible profit.

Marginal Product

The additional output gained by adding one more unit of a specific input, holding all other inputs constant.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital.