Hillsborough Street Manufacturing Inc. incurred the following costs in 2009:
$$\begin{array} { l r }
\text { Direct materials used } & \$ 37000 \
\text { Direct labour costs } & 45000 \
\text { Factory rent and utilities } & 18000 \
\text { Factory equipment depreciation } & 10000 \
\text { Marketing expenses } & 3000 \
\text { Administrative expenses } & 9000
\end{array}$$
50 000 units were produced during the year out of which 40 000 units were sold for $10 each. There was no beginning or ending raw materials or work-in-process inventory.
-What is net income for the year?

Question

Hillsborough Street Manufacturing Inc. incurred the following costs in 2009:
$$\begin{array} { l r } 
\text { Direct materials used } & \$ 37000 \
\text { Direct labour costs } & 45000 \
\text { Factory rent and utilities } & 18000 \
\text { Factory equipment depreciation } & 10000 \
\text { Marketing expenses } & 3000 \
\text { Administrative expenses } & 9000
\end{array}$$
50 000 units were produced during the year out of which 40 000 units were sold for $10 each. There was no beginning or ending raw materials or work-in-process inventory.
-What is net income for the year?

Quizplus · Accepted Answer

Net income is calculated by subtracting total expenses from total revenue. Total revenue is $10 per unit sold times 40,000 units, which equals $400,000. Total expenses include direct materials, direct labor, factory rent and utilities, factory equipment depreciation, marketing expenses, and administrative expenses, which sum up to $112,000. Therefore, net income is $400,000 - $112,000 = $288,000. However, none of the options exactly match this calculation, suggesting a possible mistake in the calculation or in the interpretation of the options provided. Given the options, the closest correct choice based on the provided calculation would be D) $300,000, assuming a potential misinterpretation in the calculation process or a typo in the question's options.

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