Keller Company Has the Following Income Statement for the Year $\begin{array}{ll}\text { Sales } & \$ 1,562 \\\text { Cost of goods sold } & {806} \\\text { Gross profit } &{756}\end{array}$

question 5

Multiple Choice

Keller Company has the following income statement for the year ending December 31,2016:
$\begin{array}{ll}\text { Sales } & \$ 1,562 \\\text { Cost of goods sold } & {806} \\\text { Gross profit } &{756}\end{array}$
Operating expenses:
$\begin{array}{ll}\text { Wage expense } & 160 \\\text { Depreciation expense } & 16 \\\text { Rent expense } & 106 \\\text { Miscellaneous expense } & \underline{10} \\\text { Total operating expenses } & \underline{292} \\\text { Operating income } & 464 \\\text { Income tax expense } & \underline{162} \\\text { Net income } & \$ 302\end{array}$
If Keller Company prepares a common size income statement,what will they report for Rent expense?

• A) 2.3%
• B) 4.3%
• C) 4.4%
• D) 6.8%

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Definitions:

Short Run

A period in economics during which at least one factor of production is considered fixed, typically focusing on the immediate effects of economic decisions.

Monopolistic

Pertaining to a market structure where there is only one producer or seller for a product or service, limiting competition.

Marginal Revenue

The extra income a company earns by selling an additional unit of a product or service.

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service; it varies depending on the level of production.