Asked by Sareeka Ramlal on May 07, 2024
Verified
The net operating income in the flexible budget for December would be closest to:
A) $16,430
B) $16,994
C) $11,795
D) $11,974
Net Operating Income
A company's total income from operations, excluding expenses and taxes.
- Appreciate the effects of budget variance on the net operating outcome.
- Assess the efficacy of a business operation through the application of flexible budget analysis.
Verified Answer
TB
Travis BrownMay 08, 2024
Final Answer :
B
Explanation :
To solve this problem, we need to use the formula for calculating net operating income:
Net Operating Income = Sales - Variable Costs - Fixed Costs
Based on the data in the question, we can calculate the flexible budget for December as follows:
Sales = 10,300 units x $4.50 per unit = $46,350
Variable Costs = 10,300 units x $1.50 per unit = $15,450
Fixed Costs = $12,906
Plugging these numbers into the net operating income formula, we get:
Net Operating Income = $46,350 - $15,450 - $12,906 = $18,994
Therefore, the closest answer choice is B, $16,994, which is the answer choice that is closest to our calculated net operating income of $18,994.
Net Operating Income = Sales - Variable Costs - Fixed Costs
Based on the data in the question, we can calculate the flexible budget for December as follows:
Sales = 10,300 units x $4.50 per unit = $46,350
Variable Costs = 10,300 units x $1.50 per unit = $15,450
Fixed Costs = $12,906
Plugging these numbers into the net operating income formula, we get:
Net Operating Income = $46,350 - $15,450 - $12,906 = $18,994
Therefore, the closest answer choice is B, $16,994, which is the answer choice that is closest to our calculated net operating income of $18,994.
Explanation :
Net operating income = ($14.10 × 5,340)− $58,300 = $16,994
Reference: CH09-Ref12
Kekiwi Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During January, the company budgeted for 6,900 units, but its actual level of activity was 6,910 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for January:
Data used in budgeting: Actual results for January:
Reference: CH09-Ref12
Kekiwi Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During January, the company budgeted for 6,900 units, but its actual level of activity was 6,910 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for January:
Data used in budgeting: Actual results for January:
Learning Objectives
- Appreciate the effects of budget variance on the net operating outcome.
- Assess the efficacy of a business operation through the application of flexible budget analysis.
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