Amalgamated Corporation's Net Income Was $2,400,000 in 2009 and $800,000

question 26

Multiple Choice

Amalgamated Corporation's net income was $2,400,000 in 2009 and $800,000 in 2010. What percentage increase in net income must Amalgamated achieve in 2011 to offset the decline in profits in 2010?

• A) 75%.
• B) 300%.
• C) 33.33%.
• D) 800%.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Variable Costing

An accounting method that only considers variable costs (costs that change with production levels) in determining product cost, excluding fixed costs.

Gross Margin

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. It indicates the efficiency with which a company uses its materials and labor to produce and sell products profitably.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.