Partners a and B Have a Profit and Loss Agreement

question 2

Multiple Choice

Partners A and B have a profit and loss agreement with the following provisions: salaries of $30,000 and $45,000 for A and B, respectively; a bonus to A of 12% of net income after salaries and bonus; and interest of 10% on average capital balances of $50,000 and $65,000 for A and B, respectively.One-fourth of any remaining profits are allocated to A and the balance to B.If the partnership had net income of $108,600, how much should be allocated to Partner A?

• A)​$43,225
• B)​$43,816
• C)​$47,850
• D)​$65,375

---

Definitions:

Oligopoly

A market structure characterized by a small number of firms dominating the market, leading to limited competition and often higher prices for consumers.

Differentiated Product

A product that is distinct from similar products offered by competitors because of features, branding, quality, or other attributes.

Price Elasticity Of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Price Discrimination

The strategy of selling the same product or service at different prices to different customers, based on their willingness to pay.