1. If cost of goods (drugs) sold is 65%, what is the gross margin? (5 pts.)

2. If a piece of equipment costs $100,000 and has a 5-year useful life and no salvage value, what is the annual depreciation expense using the straight-line depreciation method?

(5 pts.)

3. Dr. Jones is leasing his office for $60,000 per year and wants to know the cost per patient visit. Calculate the rent cost based on 4,500; 5,000; 5,500; and 6,000 visits during the year. (15 pts.)

Rent Expense	$60,000
Patient visits	Rent per Visit
4,500	________
5,000	________
5,500	________
6,000	________

4. Describe the unit of production depreciation method and the effect it will have on book value and net income when actual output exceeds expected output. (15 pts.)