Exhibit 13­4 Shows Data Gathered by Memo Co

question 4

Multiple Choice

Exhibit 13­4 shows data gathered by Memo Co.as it prepares to purchase personalcomputers for its sales offices.Assume that the personal computers are expected to lastindefinitely, that operating expenses are negligible, and that the price of Memo's product isexpected to remain constant in the future.The marginal rate of return on 60 personalcomputers is closest to

• A)19 percent
• B)24 percent
• C)30 percent
• D)52 percent
• E)520 percent

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Definitions:

Spending Variance

The difference between the actual amount spent and the budgeted or standard amount expected to be spent.

Net Operating Income

Income before interest and income taxes have been deducted.

Flexible Budget Performance Report

A report that compares the actual performance of a business to a budget that adjusts with the level of activity, providing insight into variance reasons.

Flexible Budget Report

A financial report comparing actual results to a budget that adjusts based on the actual level of output or activity, allowing for more meaningful analysis.