Use the Partial Income Statement Below to Answer the Following

question 6

Multiple Choice

Use the partial income statement below to answer the following group of questions
$$\begin{array} { l r r r } & \text { Actual } & \text { Budget } & \text { Difference } \\\text { Revenue from Sales } & \$ 65000 & \$ 55000 & 18 \% \\\text { Sales Discounts } & - 5000 & - 2000 & 150 \% \\\text { Net Sales } & 60000 & 53000 & 13 \% \\\text { Advertising } & 4000 & 1000 & 300 \% \\\text { Cost of Goods Sold } & 25000 & 28000 & - 11 \% \\& & & \\\text { Sales Commissions } & 6000 & 3000 & 100 \% \\\text { Other Expenses } & 4000 & 4000 & 0 \% \\\text { Total Expenses } & 39000 & 36000 & 8 \% \\& & & \\\text { Net Income } & \mathbf { 2 1 0 0 0 } & \underline { \mathbf { 1 7 0 0 0 } } & \mathbf { 2 4 }\end{array}$$
-Which one of the following is not a reasonable explanation for these results -

• A) net income was higher than budgeted because sales were higher than budgeted
• B) net income was higher than budgeted because some expenses were lower than budgeted
• C) net income was higher than budgeted because the budget was not realistic
• D) net income may have been higher because inventory prices were raised after the budget was set

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Definitions:

Compensation

Compensation refers to the total amount of the financial and non-financial rewards provided to employees for their service to the organization, including wages, benefits, and bonuses.

Employer Rights

Legal entitlements and powers that allow business owners and managers to conduct business, manage their employees, and make decisions regarding workplace operations.

Union Contract

A written agreement between a labor union and an employer that outlines the terms of employment, including wages, hours, working conditions, and grievance procedures.

Legally Binding

A contract or agreement that is enforceable by law, where parties are obligated to fulfill their contractual duties.