Witten Corporation Is a Service Company That Measures Its Output

question 105

Multiple Choice

Witten Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. A total of 27 customers were actually served during January. The "Employee salaries and wages" in the flexible budget for January would have been closest to:

• A) $77,100
• B) $65,348
• C) $80,200
• D) $82,100

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Manufacturing Margin

The difference between the sales revenue generated by manufactured goods and the cost of producing those goods, indicating profitability.

Variable Costing

A pricing technique that incorporates solely the variable costs of production—such as raw materials, direct labor, and variable overhead expenses—into the per-unit cost of products.

Variable Overhead

Costs that change with the level of production or service activities.