Shown Below Are a Company's Ledger Accounts and Their End-Of-Period

question 86

Multiple Choice

Shown below are a company's ledger accounts and their end-of-period balances before closing entries are posted.What amount will be posted to Retained Earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)
$\begin{array}{|l|r|}\hline \text { Retained earnings } & \$ 14,000 \\\hline \text { Dividends } & 19,200 \\\hline \text { Sales Revenue } & 58,000 \\\hline \text { Rent expense } & 7,200 \\\hline \text { Salaries expense } & 14,400 \\\hline \text { Insurance expense } & 840 \\\hline \text { Depr. Expense - equipment } & 900 \\\hline \text { Accum depr. - equipment } & 2,500\\\hline\end{array}$

• A)$16,780 debit
• B)$15,460 credit
• C)$48,660 credit
• D)$34,660 credit
• E)$17,960 credit

---

Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit; an important metric in understanding per unit profitability and in break-even analysis.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Variable Cost Per Unit

The cost that varies with the level of output or activity and is typically assessed on a per-unit basis.

Fixed Cost Per Unit

This is the calculated cost assigned to each unit of production, derived by dividing the total fixed costs by the number of units produced.