Revenue is $210,000, direct cost is $154,000, and overhead expense is $38,500. What net income is shown before tax?
Correct Answer
A) $17,500.
Revenue minus direct cost gives $56,000 gross profit. Subtracting $38,500 overhead gives $17,500 net income before tax.
Why This Is the Correct Answer
Revenue minus direct cost gives $56,000 gross profit. Subtracting $38,500 overhead gives $17,500 net income before tax.
Why the Other Options Are Wrong
Option B: $38,500.
$38,500. is above the supported result for net income calculation; it likely adds an unsupported amount or compares the wrong financial base.
Option C: $56,000.
$56,000. is above the supported result for net income calculation; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $94,500.
$94,500. is above the supported result for net income calculation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Revenue and cost live in different drawers; Reviewing Statement tells which opens.
Reference Hint
Study anchor (closed-book): memorize Net income calculation from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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