Question

Question 5: During its first year of operations, Connor Company paid $50,000 for direct materials and $36,000 in wages for production workers. Lease payments and utilities on the production facilities amounted to $14,000. General, selling, and administrative expenses were $16,000. The company produced 5,000 units and sold 4,000 units for $30.00 a unit. How much is the net income? Select one: O a. $30,000 O b. $35,000 O c. $24,000 O d. $25,000

Answer 1

Solution:
	Income Statement
		Amount	Amount
	Revenues:
	Sales Revenue (4,000 Units X $ 30)		$       1,20,000
	Less: Cost of Good Sold
	Direct Materials	$            50,000
	Direct Labor (Wages )	$            36,000
	Lease & General Facility	$            14,000
	Total Cost of Goods Manufacutured	$        1,00,000
	Cost of Goods Sold (100,000 X 4,000 Units / 5,000 Units)		$           80,000
	Gross Profit		$           40,000
	Less: General Selling and adminsitrative Expenses		$           16,000
	Net Income		$           24,000
	Answer = Option C = $ 24,000