Suppose a Company Reports the Following Information at December 31,2013

question 15

Multiple Choice

Suppose a company reports the following information at December 31,2013: $\begin{array}{llll} \text { Sales } &\$ &15,000,000\\ \text { Cash } &\$ & 3,000,000 \\ \text { Uneaned Revenue } &\$ & 400,000 \\ \text { Dividends } &\$ & 1,000,000 \\ \text { Cost of Sales } &\$ & 8,500,000\end{array}$

-What is the company's Gross Profit?

• A)$ 6,100,000
• B)$ 5,500,000
• C)$ 6,500,000
• D)$12,000,000

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Definitions:

Total Fixed Costs

Expenses that do not change with the level of production or sales over a certain time period, such as rent or salaries.

Variable Input

A factor of production, such as labor or raw materials, whose quantity can be changed easily by a business to adjust to the level of output.

Short Run

Short Run is a time period in economics during which at least one input is fixed while others are variable.

Fixed Input

A factor of production that cannot be easily increased or decreased in the short term, such as land or machinery.