Figure 2-2

question 24

Multiple Choice

Figure 2-2.Lonborg Co. had the following beginning and ending inventory balances for the year ended December 31, 2011:
In addition, direct labor costs of $30,000 were incurred, overhead equaled $42,000, materials purchased were $27,000 and selling and administrative costs were $22,000. Lonborg Co. sold 25,000 units of product during the year at a sales price of $5.00 per unit.
-Refer to Figure 2-2. What was Lonborg's operating income <loss> for the year?

• A) $18,500
• B) $125,000
• C) $<3,500>
• D) $5,500

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Definitions:

Total Reserves

The sum of a bank's deposits held at the central bank and the cash held in vaults.

Checkable Deposits

Refers to deposits in bank accounts from which individuals can write checks or use debit cards to make purchases directly.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by central banking regulations.

Money Supply

Refers to the total amount of money—cash, coins, and balances held in checking and savings accounts—available within an economy at a specific time.