Based on a Predicted Level of Production and Sales of 30,000

question 40

Multiple Choice

Based on a predicted level of production and sales of 30,000 units,a company anticipates total contribution margin of $105,000,fixed costs of $40,000,and operating income of $52,000.Based on this information,the budgeted operating income for 28,000 units would be:

• A)$52,000.
• B)$135,333.
• C)$58,000.
• D)$72,500.
• E)$105,000.

Analyze the impact of adopting an ABC system on the allocation of manufacturing overhead costs to products.

Evaluate the financial implications of implementing an ABC system for product pricing and profitability analysis.

Differentiate between plantwide overhead rates and activity-based costing in allocating overhead costs.

Identify the costs not assigned to products under an activity-based costing system.

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Definitions:

Statement of Retained Earnings

This report outlines the fluctuation in a company’s retained earnings over a particular accounting timeframe, incorporating elements like net profits and dividend distributions.

Cash Flow Statement

A financial document summarizing the total cash received by a company from its operational activities and external investments, alongside all expenditures on operations and investments within a specific timeframe.

Equipment Account

An account on a company's balance sheet that reports the value of the company's equipment used in operations, less any accumulated depreciation.

Posting

The process of recording financial transactions in the ledger of a company as part of the accounting cycle.