Ramon Company Reported the Following Units of Production and Sales

question 93

Multiple Choice

Ramon Company reported the following units of production and sales for June and July:
Income under absorption costing for June was $40,000; income under variable costing for July was $50,000. Fixed costs were $600,000 for each month.
-Refer to Figure 8-7. How much was income for July using absorption costing?

• A) $50,000
• B) $20,000
• C) $80,000
• D) $40,000

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Definitions:

Equity Multiplier

A financial ratio that measures the proportion of a company’s assets that are financed by stockholders' equity, indicating the level of debt financing.

New Equity

Funds raised by a company through the issuance of shares to the public or to specific investors.

New Assets

Items of value that are acquired or added to a company's or individual's holdings, which have the potential to generate income or increase net worth.

Enterprise Multiple

A valuation metric that compares a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization (EBITDA).