A Company's Master Budget for October Is to Manufacture and Sell

question 118

Multiple Choice

A company's master budget for October is to manufacture and sell 30,000 units, for a total sales revenue of $270,000, total variable costs of $180,000, and total fixed costs of $24,000. The company actually manufactured and sold 32,000 units, and generated $45,000 of operating income in October.

The flexible-budget operating income in October, to the nearest dollar, was:

• A) $27,000.
• B) $70,400.
• C) $72,000.
• D) $83,520.
• E) $86,400.

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Definitions:

Metamorphism

The process by which the composition or structure of rocks is changed by heat and pressure over geological time.

Magma

Magma is molten rock beneath the Earth's surface, which can form igneous rocks upon cooling.

Igneous Rocks

Rocks formed through the cooling and solidification of magma or lava.

Sedimentary Rock

A type of rock that forms from the accumulation and cementation of mineral and organic particles, often in layered deposits.