In 2013, Amana Sold 10 Refrigerators That Cost $825 Each

question 49

Multiple Choice

In 2013, Amana sold 10 refrigerators that cost $825 each, for a price of $1 285 each. Payments are made in 10 equal instalments, with no down payment. During 2014, Amana collected $10 285 on the 2013 sales. Using the instalment method and assuming an interest rate of 10%, how much gross profit will Amana recognise in 2014?

• A)$129
• B)$460
• C)$790
• D)None; it is all recognised in 2013.

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Definitions:

Division Profits

The earnings attributed to a specific branch or department within a larger organization, reflecting its financial performance.

Profit Centers

Individual departments or units within a business that are responsible for generating their own profits.

Decision Making

The process of identifying and choosing alternatives based on the values and preferences of the decision maker.

Cost Center

A business unit or department that incurs expenses but does not directly generate revenues, typically evaluated on its cost efficiency.