Tiny Toons Distributes Cartoon DVDs That Sell for $12 Each

question 96

Multiple Choice

Tiny Toons distributes cartoon DVDs that sell for $12 each. Tiny Toons pays $7 per DVD to buy the product. Selling costs of $1 per unit are incurred to deliver the DVDs to the customer. This is paid in cash when the product is sold. Tiny Toons has $50,000 per month in fixed selling and administrative expenses (including $3,000 in depreciation) , which are paid half in the month incurred and half in the next month. It is Tiny's policy to maintain an inventory at the end of each month equal to 30% of the next month's projected unit sales.
Tiny Toons makes 30% of sales in cash, and the remainder are on credit. Credit sales are collected in the month after sale. Budgeted monthly sales for the first five months of 2014 are: $$\begin{array} { l l } \text { January } & 20,000 \text { units } \\\text { February } & 22,000 \text { units } \\\text { March } & 26,000 \text { units } \\\text { April } & 28,000 \text { units } \\\text { May } & 40,000 \text { units }\end{array}$$
How much is budgeted income for March using variable costing?

• A) $312,000
• B) $54,000
• C) $57,000
• D) $104,000

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Definitions:

PIPEDA

The Personal Information Protection and Electronic Documents Act, a Canadian law that governs how private sector organizations collect, use, and disclose personal information in the course of commercial business.

Judicial Approval

The official acceptance or endorsement of a legal process or decision by a court of law.

Video Surveillance

The use of video cameras to monitor activities in a particular area, often for security purposes.

GPS Tracking

The use of Global Positioning System technology to ascertain the precise location of a person, vehicle, or other asset to which it is attached.