The following information relates to Marshall Manufacturing's current accounting period: Based on this information, what is the company's net income?
$$\begin{array} { |l | r | }
\hline \text { Raw materials used } & \$ 34,000 \
\hline \text { Direct labor wages } & 66,000 \
\hline \text { Sales salaries and commissions } & 50,000 \
\hline \text { Depreciation on production equipment } & 6,000 \
\hline \text { Rent on manufacturing facilities } & 4,000 \
\hline \text { Administrative supplies and utilities } & 10,000 \
\hline \text { Sales revenue } & 210,000 \
\hline \text { Units produced } & 10,000 \
\hline \text { Units sold } & 10,000 \
\hline
\end{array}$$

Question

The following information relates to Marshall Manufacturing's current accounting period: Based on this information, what is the company's net income?
$$\begin{array} { |l | r | } 
\hline \text { Raw materials used } & \$ 34,000 \
\hline \text { Direct labor wages } & 66,000 \
\hline \text { Sales salaries and commissions } & 50,000 \
\hline \text { Depreciation on production equipment } & 6,000 \
\hline \text { Rent on manufacturing facilities } & 4,000 \
\hline \text { Administrative supplies and utilities } & 10,000 \
\hline \text { Sales revenue } & 210,000 \
\hline \text { Units produced } & 10,000 \
\hline \text { Units sold } & 10,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

Net income is calculated as sales revenue minus total expenses. Total expenses include raw materials used, direct labor wages, sales salaries and commissions, depreciation on production equipment, rent on manufacturing facilities, and administrative supplies and utilities. In this case, total expenses are $34,000 + $66,000 + $50,000 + $6,000 + $4,000 + $10,000 = $170,000. Therefore, net income is $210,000 - $170,000 = $40,000.

The Following Information Relates to Marshall Manufacturing's Current Accounting Period