The Following Information Pertains to Questions

question 16

Multiple Choice

The following information pertains to questions
The following information pertains to the shareholdings of an affiliated group of companies.The respective ownership interest of each company is outlined below.
A Inc.:
A Inc.owns 75% of J Inc.and 60% of G Inc.
J Inc.:
J Inc.owns 60% of D Inc.and 20% of G Inc.
G Inc.:
G Inc.owns 10% of J Inc.and 80% of Y Inc.
All intercompany investments are accounted for using the equity method.
The Net Incomes for these companies for the year ended December 31,2009 were as follows: Unrealized intercompany profits earned by the various companies for the year ended December 31,2009 are shown below: All companies are subject to a 25% tax rate.
-What is the net Income for the combined entity?

• A)$2,170,000
• B)$660,000
• C)$1,510,000
• D)$1,773,625

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Definitions:

Machine-Hours

The total number of hours that machinery is operating for production purposes.

Machining

A manufacturing process involving the shaping of metal or other materials using machines such as lathes, milling machines, and grinders.

Finishing

Refers to the final process in manufacturing or production, where products are completed, treated, or coated to meet quality and design specifications.

Manufacturing Overhead

Indirect factory-related costs that are incurred when a product is manufactured, such as utilities and salaries for maintenance workers.