You Have Been Given the Following Information for Ross's Rocket

question 38

Multiple Choice

You have been given the following information for Ross's Rocket Corp.: Net sales = $1,000,000; Gross profit = $400,000; Addition to retained earnings = $60,000; Dividends paid to preferred and common stockholders = $90,000; Depreciation expense = $50,000. The firm's tax rate is 40 percent. What are the cost of goods sold and the interest expense for Ross's Rocket Corp.?

• A) $100,000, and $600,000, respectively
• B) $600,000, and $100,000, respectively
• C) $600,000, and $200,000, respectively
• D) $700,000, and $100,000, respectively

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Definitions:

Marginal Revenue Product

The additional revenue generated by employing one more unit of a resource, factor, or input.

Wage Rate

The amount of compensation paid to an employee per unit of time worked, often expressed as an hourly rate.

Marginal Physical Product

The additional output resulting from using one more unit of a physical input, holding other inputs constant, in the production process.

Total Revenue

The price of a good or service multiplied by the number of units sold.