The Financial Statements of Black Barn Company Are Given Below

question 64

Multiple Choice

The financial statements of Black Barn Company are given below. $\begin{array}{c} \text { Black Barn Company } \\\text { Income Statement (2009) }\\\begin{array}{lrr} \hline \text { Sales } & \$ 8,000,000 \\\text { Cost of goods sold } & \underline {5,260,000} \\\text { Gross profit } & 2,740,000 \\\text { Selling \& administrative expenses } & \underline {1,500,000} \\\text { Operating profit } & 1,240,000 \\\text { Interest expense } & \underline {140,000 }\\\text { Income before tax } & 1,100,000 \\\text { Tax expense } & \underline {440,000} \\ \text { Net income } & \underline {\$ 660,000} \\\end{array} \end{array}$ $\begin{array}{c}\begin{array}{lll} \text { Balance Sheet } &2009\\\\ \text { Cash } &\$ 200,000 \\ \text { Accounts receivable } & 1,200,000 \\ \text { Inventory } & \underline {1,840,000} \\ \text {Total current assets } &\$ 3,240,000 \\ \text {Fixed assets } & \underline {3,200,000} \\ \text { Total assets } & \underline {\$ 6,440,000} \\\\ \text { Accounts Payable } &\$ 800,000 \\ \text { Bank loan } & \underline {600,000} \\ \text { Total current liabilities } & \$ 1,400,000 \\ \text {Bond payable } & \underline { 900,000} \\ \text { Total liabilities } & \underline {\$ 2,300,000 }\\ \text { Common stock ( 130,000 shares) } & \$ 300,000 \\ \text {Retained earnings } & \underline {3,840,000}\\ \text { Total liabilities \& equity } & \underline {\$ 6,440,000} \\\end{array}\begin{array}{lll}2008\\\\\$ 50,000 \\ 950,000 \\ \underline { 1,500,000 }\\ \$ 2,500,000 \\ \underline { 3,000,000} \\ \underline { \$ 5,500,000 }\\\\\$ 720,000 \\ \underline { 100,000} \\ \$ 820,000 \\ \underline {1,000,000} \\ \underline {\$ 1,820,000 }\\\$ 300,000\\ \underline { 3,380,000} \\ \underline { \$ 5,500,000} \\\end{array}\end{array}$ Note: The common shares are trading in the stock market for $40 each. Refer to the financial statements of Black Barn Company. The firm's return on sales ratio for 2009 is

• A) 15.5%.
• B) 14.6%.
• C) 14.0%.
• D) 15.0%.
• E) 16.5%.

Understand the implications of price discrimination and perfect price discrimination for producer surplus and total revenue.

Analyze the concept of deadweight loss in the context of monopoly and its impact on social welfare.

Recognize the role of government interventions, such as patents and copyrights, in regulating monopolies and addressing inefficiencies.

Understand the significance of barriers to entry in maintaining a monopoly position in the long run.

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Definitions:

Motivational Value

The inherent capacity of a stimulus, activity, or goal to evoke a motivational response or encourage sustained engagement and effort.

Fringe Benefit Systems

A collection of non-wage compensations provided to employees in addition to their normal wages or salaries.

Job Performance

The level of effectiveness and efficiency with which an individual fulfills their designated job roles and responsibilities.

Total Compensation

The complete package of direct financial benefits (like salary, bonuses) and indirect benefits (such as health insurance, pensions) that an employee receives from an employer.