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Unformatted text preview: 6. Operating income calculations use: a. net income b. income tax expense c. cost of goods sold and operating costs d. nonoperating revenues and nonoperating expenses 7. The Tessmer Company has fixed costs of $400,000 and variable costs are 75% of the selling price. To realize profits of $100,000 from sales of 500,000 units, the selling price per unit: a. must be $1.00 b. must be $1.33 c. must be $4.00 d. is indeterminable Answers 1. False 2. True, because all variable costs are subtracted to compute contribution margin, but only COGS is subtracted to compute gross margin. 3. False If Johnsons Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $18,000, a Contribution Income Statement emphasizing contribution margin would show the same operating income. 4. True 5. C, 6. C, 7. C...
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This note was uploaded on 07/07/2009 for the course ACCT 2102 taught by Professor Unknown during the Three '08 term at Queensland.
- Three '08