A Corporation Sold Goods for $10 Million During 2007

question 112

Multiple Choice

A corporation sold goods for $10 million during 2007. Of this amount, $6 million were in cash, and $4 million was on account. However, the company collected $2 million of the sales on account during 2007. In conformity with the revenue principle, the amount of revenue that should be recognized in 2007 is:

• A) $2 million
• B) $4 million
• C) $6 million
• D) $8 million
• E) $10 million

---

Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, calculated before the period begins based on estimated costs and activity levels.

Machine-Hours

The total duration of operation for machinery within a specified timeframe, used in cost and efficiency analysis.

Selling Price

The amount of money a customer pays for a particular product or service.

Unit Product Costs

The total cost associated with producing one unit of a product, including direct materials, direct labor, and overhead.