For Franklin, Inc

question 54

Multiple Choice

For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What is net income?

• A) $120,000
• B) $216,000
• C) $504,000
• D) $720,000

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Definitions:

Compounded Quarterly

A method of calculating interest where the accrued interest is added to the principal sum every quarter, thus increasing the base for the next interest calculation.

Nominal Rate

The quoted interest rate on a loan or investment, not adjusting for the effect of compounding or inflation.

Compounded Quarterly

Interest on an investment or loan that is calculated and added to the principal four times a year.

Rate of Return

The gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.