Denver Manufacturing Company Has the Following Information All Cash Expenses Are Paid as Incurred

question 106

Multiple Choice

Denver Manufacturing Company has the following information: $\begin{array}{lr}\text { Month } & \text { Budgeted Sales } \\\hline \text { Januaty } & \$ 76,000 \\\text { February } & 85,000 \\\text { March } & 92,000 \\\text { April } & 79,000\end{array}$

$\begin{array}{lr}\text { Budgeted } & \text { Expenses per Month } \\\text { Wages } & \$ 15,000 \\\text { Advertising } & 12,000 \\\text { Depreciation } & 3,000 \\\text { Other } & 4 \% \text { of sales }\end{array}$ All cash expenses are paid as incurred._____ is the expected total expenses budgeted for the month of January.

• A)$30,000
• B)$30,040
• C)$31,200
• D)$33,040

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Definitions:

Absorption Costing

An accounting method where all manufacturing costs, both fixed and variable, are attributed to the production of products.

Variable Costing

A costing method in which variable manufacturing costs are included in product costs, while fixed manufacturing costs are treated as period costs.

Absorption Costing

An accounting method that assigns all manufacturing costs, both variable and fixed, to products, thereby impacting the inventory valuation on the balance sheet.

Net Operating Income

The profit a company makes from its operations, calculated as total revenue minus operating expenses, excluding taxes and interest.