Reference: 06-13
a Comparative Income Statement for Jimbob Co -What Is the Best Estimate of the Company's Variable Operating

question 20

Multiple Choice

Reference: 06-13
A comparative income statement for Jimbob Co., a merchandising company, for the three months ended June is presented below.
Jimbob Co.
Comparative Income Statement
For the Second Quarter $$\begin{array} { | l | r | r | l | } \hline & \text { April } & \text { May } & \text { June } \\\hline \text { Sales in units } & 4,500 & 5,250 & 6,000 \\\hline \text { Sales revenue } & \$ 630,000 & \$ 735,000 & \$ 840,000 \\\hline \text { Less cost of goods sold } & 252,000 & 294,000 & 336,000 \\\hline \text { Gross Margin } & 378,000 & 441,000 & 504,000 \\\hline \text { Less operating expenses: } & & & \\\hline \text { Shipping expense } & 56,000 & 63,500 & 71,000 \\\hline \text { Advertising expense } & 70,000 & 70,000 & 70,000 \\\hline \text { Salaries and commissions } & 143,000 & 161,750 & 180,500 \\\hline \text { Insurance expense } & 9,000 & 9,000 & 9,000 \\\hline \text { Depreciation expense } & 42,000 & 42,000 & 42,000 \\\hline \text { Total operating expenses } & { 320,000 } & 346,250 & 372,500 \\\hline \text { Net income } & \underline { \$ 88,000 } & \underline { \$ 94,750 } & \$ 131,500 \\\hline\end{array}$$
-What is the best estimate of the company's variable operating expenses per unit

• A)$44.22 per unit.
• B)$65.95 per unit.
• C)$35.00 per unit.
• D)$71.11 per unit.

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Definitions:

Output Shaft Speed

The rotational speed of the shaft that transfers power from the transmission to the differentials in a vehicle.

Helical Gearing

A type of gear with angled teeth, used in machinery to transmit power smoothly and quietly between non-parallel shafts.

Right-Hand Gears

Gears configured for systems where the drive or operation is predominantly on the right side, used to alter the direction or speed of mechanical energy.

Teeth Rotating

The action or process of gear teeth moving in relation to one another to transmit power from one shaft to another.