The Grinch Company Has Gathered the Following Information for the Year

question 81

Multiple Choice

The Grinch Company has gathered the following information for the year ended December 31, 20X0: $\begin{array}{ll}\text { Sales } & \$ 75,000 \\\text { Direct materials used } & 12,900 \\\text { Direct labor } & 5,200 \\\text { Fixed: } & \\\text { Factory overhead } & 6,400 \\\text { Selling expenses } & 2,300 \\\text { Administrative expenses } & 1,700\end{array}$ $$\begin{array}{l}\text { Variable: }\\\begin{array} { l l } \text { Factory overhead } & 3,300 \\\text { Selling expenses } & 5,700 \\\text { Administrative expenses } & 8,300\end{array}\end{array}$$ There were no beginning or ending inventories. Net income is:

• A) $48,900
• B) $39,600
• C) $56,900
• D) $29,200

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Definitions:

Excess Acquisition-Date Fair Value

Refers to the amount by which the fair value of the acquired net assets exceeds the purchase consideration in a business combination.

Indirect Method

A method used in cash flow statement preparation that adjusts net income for non-cash transactions.

Book Value

The value of an asset according to its balance sheet account balance, typically calculated as the asset's cost minus any accumulated depreciation.

Stock Issuance

The process by which a company issues new shares of stock to raise capital for business operations or expansions.