McNally Industries Has a Condensed Income Statement as Shown Using Horizontal Analysis,calculate the Amount and Percent Change for Sales

question 176

Multiple Choice

McNally Industries has a condensed income statement as shown. $\begin{array}{|l|r|r|}\hline & \text { Year 2 } & \text { Year 1 } \\\hline \text { Sales } & \$ 198,000 & \$ 165,500 \\\hline \text { Total operating expenses } & 163,000 & 147,500 \\\hline \text { Net income } & 35,000 & 18,000 \\\hline\end{array}$
Using horizontal analysis,calculate the amount and percent change for sales.Round to one decimal place.

• A)$32,500,19.6%
• B)$18,000,10.9%
• C)$35,000,17.7%
• D)$17,000,9.4%

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Definitions:

Long-run Supply Curve

A graphical representation showing the relationship between price and quantity supplied over a longer period, when all inputs can be varied.

Perfectly Elastic

Describes a situation in which the quantity demanded or supplied changes by an infinite amount in response to any price change, depicted as a horizontal line on a graph.

Long-run Equilibrium

A state in which all factors of production are variable, leading to a situation where firms only earn normal profits and no incentives exist for entering or exiting the industry.

Short-run Equilibrium

The condition in which the quantity supplied equals the quantity demanded at a particular price level, but only over a short period.