Gaudy Inc Produces and Sells a Single Product

question 17

Multiple Choice

Gaudy Inc. produces and sells a single product. The company has provided its contribution format income statement for May. If the company sells 4,300 units, its net operating income should be closest to:

• A)$7,700
• B)$25,513
• C)$26,700
• D)$19,500

---

Definitions:

Banker's Acceptance

A short-term debt instrument issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Accounts Receivable Policy

outlines the terms and conditions under which a company extends credit to its customers, including payment terms, interest rates on overdue payments, and collection procedures.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales by analyzing the number of times average accounts receivable are turned over during a period.

Credit Sales

Transactions where the goods or services are provided to the customer with the understanding that payment will be made at a later date.