A Company Has Net Income of $250,000, Net Sales of $2,000,000

question 101

Multiple Choice

A company has net income of $250,000, net sales of $2,000,000, and average total assets of $1,500,000. Its return on total assets equals:

• A) 12.5%.
• B) 13.3%.
• C) 16.7%.
• D) 75.0%.
• E) 600.0%.

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Definitions:

Direct Labor

The wages and benefits paid to employees who are directly involved in the production of goods or services.

Standard Costs

Predetermined costs for manufacturing goods, used as benchmarks to measure performance.

Average Cost

The total cost divided by the number of units, used to calculate cost of goods sold and ending inventory valuation.

Work in Process

Inventory that includes materials that are currently being processed into finished goods but are not yet complete.