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Use This Balance Sheet and Income Statement to Answer the Following

question 5

Multiple Choice

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. $\begin{array}{c} \text {Abner Systems, Inc.}\\ \text {Income Statement}\\ \text {For the Year Ended December 31, 2010}\\\begin{array}{llr} \text { Net sales } &\$24,000\\ \text { Costs of goods sold } &8,000\\ \text { Gross margin } &\$16,000\\ \text { Operating expenses} &8,000\\ \text {Income before income taxes } &\$8,000\\ \text { Income taxes } &3,200\\ \text { Net income} &\$4,800\end{array}\end{array}$

$Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. \begin{array}{c} \text {Abner Systems, Inc.}\\ \text {Income Statement}\\ \text {For the Year Ended December 31, 2010}\\ \begin{array}{llr} \text { Net sales } &\$24,000\\ \text { Costs of goods sold } &8,000\\ \text { Gross margin } &\$16,000\\ \text { Operating expenses} &8,000\\ \text {Income before income taxes } &\$8,000\\ \text { Income taxes } &3,200\\ \text { Net income} &\$4,800 \end{array}\end{array} The debt to equity ratio for Abner Systems is A) 67 percent. B) 75 percent. C) 25 percent. D) 33-1/3 percent.$ The debt to equity ratio for Abner Systems is

Definitions:

Level Strategy

An inventory management strategy where production rates or workforce levels are kept constant despite demand fluctuations.

Formal Planning Model

A structured approach to planning that involves systematic procedures and methodologies to achieve specified objectives.

Pure Level Strategy

A production strategy where the output rates are kept constant and inventory is used to absorb fluctuations in demand.

Aggregate Planning

The process of creating a production plan to meet demand over a medium-term horizon by adjusting production rates, workforce levels, and inventory levels.