It Costs Homer's Manufacturing $0

question 162

Multiple Choice

It costs Homer's Manufacturing $0.65 to produce baseballs and Homer sells them for $5.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $17,000 a month rent for his factory and store, and also pays $78,000 a month to his staff in addition to the commissions. Homer sold 70,500 baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his operating income?

• A)$384,050
• B)$352,500
• C)$63,450
• D)$194,050

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Definitions:

Discount on Bonds Payable

The gap between a bond's nominal value and its market price when the bond is traded at a price below its nominal value.

Carrying Value

The book value of an asset or liability, reflecting its original cost adjusted for factors such as depreciation or amortization.

Carrying Value

The net amount at which an asset or liability is reported in the financial statements, factoring in depreciation, amortization, and impairment charges.

Unamortized Discount

The portion of a bond's issue price that is below its face value and has not yet been expensed as interest over the life of the bond.