If Parthenon Company Had Net Income of $540,000 in 2011

question 13

Essay

If Parthenon Company had net income of $540,000 in 2011 and it experienced a 20% increase in net income over 2010, what was its 2010 net income?

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Definitions:

Conversion Cost

The combination of labor and manufacturing overhead costs required to convert raw materials into finished goods.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished goods.

FIFO Method

"First In, First Out," an inventory valuation method where goods first purchased or produced are sold first, affecting inventory cost and profits.

Process Costing

An accounting method used where costs are accumulated for a continuous process and then assigned to individual units of output.