Asked by Mitch Carpenter on May 07, 2024
Verified
The net operating income in the flexible budget for November would be closest to:
A) $16,494
B) $19,520
C) $18,760
D) $16,767
Net Operating Income
It is the total profit of a company after operating expenses are subtracted from total revenue but before interest and taxes are deducted.
- Understand the implications of budget variances on net operating income.
Verified Answer
MT
Melissa TrimbleMay 10, 2024
Final Answer :
C
Explanation :
The flexible budget formula for net operating income is:
Sales - Variable Cost - Fixed Cost = Net Operating Income
Using the data provided:
- Sales: $55,000
- Variable Cost: ($22,000 x 80%) + ($33,000 x 60%) = $17,600 + $19,800 = $37,400
- Fixed Cost: $16,500
Plugging the numbers into the formula:
$55,000 - $37,400 - $16,500 = $1,100
Therefore, the net operating income in the flexible budget for November would be closest to $18,760 (C).
Sales - Variable Cost - Fixed Cost = Net Operating Income
Using the data provided:
- Sales: $55,000
- Variable Cost: ($22,000 x 80%) + ($33,000 x 60%) = $17,600 + $19,800 = $37,400
- Fixed Cost: $16,500
Plugging the numbers into the formula:
$55,000 - $37,400 - $16,500 = $1,100
Therefore, the net operating income in the flexible budget for November would be closest to $18,760 (C).
Explanation :
Net operating income = ($15.20 × 6,050)− $73,200 = $18,760
Reference: CH09-Ref5
Tomlison Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During October, the company budgeted for 5,100 units, but its actual level of activity was 5,150 units.The company has provided the following data concerning the formulas to be used in its budgeting:
Reference: CH09-Ref5
Tomlison Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During October, the company budgeted for 5,100 units, but its actual level of activity was 5,150 units.The company has provided the following data concerning the formulas to be used in its budgeting:
Learning Objectives
- Understand the implications of budget variances on net operating income.
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