Fred,Kristina,and Nick Each Receive a $14,000 Salary,as Well as 15

question 75

Essay

Fred,Kristina,and Nick each receive a $14,000 salary,as well as 15 percent interest on their respective average investments of $40,000,$20,000,and $80,000.If they share remaining income in a 4:3:2 ratio,respectively,by how much would Nick's account increase assuming net income of $81,000.

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Definitions:

Absorption Costing

A method of accounting that incorporates both variable and fixed manufacturing expenses into the pricing of a product.

Variable Costing

A costing method in which only variable production costs are assigned to inventory and cost of goods sold, excluding fixed manufacturing overhead.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, culminating in net income or loss.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted.