Net Income Is Calculated By

question 19

Multiple Choice

Net income is calculated by:

• A)Net Income = Assets + Revenues
• B)Net Income = Revenues + Owners' Equity
• C)Net Income = Revenues - Expenses
• D)Net Income = Assets - Liabilities

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Definitions:

Direct Labor-Hours

The cumulative hours put in by workers who are directly engaged in the manufacturing process.

Standard Labor Rate

The predetermined cost per hour for labor, used in budgeting and costing calculations.

Standard Machine-Hours

A predetermined amount of time that should be required to complete a task or produce a product on a machine, used for planning and efficiency analyses.

Variable Overhead Efficiency Variance

The difference between the actual hours taken to produce something and the standard hours expected, multiplied by the variable overhead rate per hour.