Using the Absorption Method, the Net Income for Year Is

question 61

Multiple Choice

Using the absorption method, the net income for year is:

• A) $200,000
• B) $180,000
• C) $170,000
• D) $16,000

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Definitions:

Profit Margin

A financial metric used to assess a company's profitability by calculating the percentage of revenue that exceeds the costs of goods sold.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business.

Dividend Payout Ratio

The fraction of net earnings a firm pays to its shareholders as dividends, expressed as a percentage.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales generated by comparing the net income and the revenue of a company.