Rice,Hepburn and DiMarco Formed a Partnership with Rice Contributing $60,000,Hepburn

question 71

Multiple Choice

Rice,Hepburn and DiMarco formed a partnership with Rice contributing $60,000,Hepburn contributing $50,000,and DiMarco contributing $40,000.Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments.If the partnership had income of $75,000 for its first year of operation,what amount of income (rounded to the nearest dollar) would be credited to DiMarco's capital account?

• A)$20,000
• B)$25,000
• C)$30,000
• D)$40,000
• E)$75,000

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Definitions:

Incremental Costs

Incremental costs are the additional costs that are incurred from producing an additional unit of product or making a decision.

Incremental Revenue

The increase in income resulting from a specific business decision, distinct from the company's base revenue level.

Overhead

Overhead refers to the ongoing administrative and general expenses of a business that are not directly tied to a specific product or service production but are necessary for the business's operations.

Direct Labor

The labor costs directly tied to the production of goods or services, which can be directly attributed to specific units of production.