Use the Information Given Below to Answer the Following Questions

question 10

Multiple Choice

Use the information given below to answer the following questions:
During the year, Grasso Ltd sold 2000 items at $30 each. The cost price of the items was $22 each. Operating expenses totalled $7000 and income tax expense was $4000.
-If this were the first year of Grasso Ltd's operations,what is the maximum amount that could be paid out in dividends to shareholders?

• A) $5000
• B) $16 000
• C) $60 000
• D) $9000

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Definitions:

Total Revenue

The total receipts from sales of goods or services over a certain period of time before any expenses are subtracted.

Variable Input

An input in the production process that changes quantity with the level of output, such as labor or raw materials.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, key in making decisions on resource allocation.

Profit-maximizing

A strategy or process utilized by businesses to determine the price and output level that results in the highest profit.