Stafford Company Prepared a Static Budget for a Production and Sales

question 74

Multiple Choice

Stafford Company prepared a static budget for a production and sales volume of 10,000 units. $\begin{array}{l}\begin{array}{|l|}\hline\\\hline \text { Number of units }\\\hline \text { }\\\hline \text { Sales revenue }\\\hline \text { Variable manufacturing costs: }\\\hline \text { Materials }\\\hline \text { Labor }\\\hline \text { Overhead }\\\hline \text { Variable general, selling, and administrative costs }\\\hline \text { Contribution margin }\\\hline \text { Fixed costs }\\\hline \text { Manufacturing overhead }\\\hline \text { General, selling, and administrative costs }\\\hline \text { Net income }\\\hline\end{array}\begin{array}{l|}\hline \\\hline \\ \hline \text { Per unit standards}\\\hline \$ 65.00 \\\hline \\\hline\$ 11.00 \\\hline\$ 9.00 \\\hline\$ 4.20 \\\hline\$ 11.00 \\ \hline \\\hline \\\hline \\\hline \\\hline \\\hline\end{array}\begin{array}{l|}\hline \text {Static Budget}\\\hline \$ \quad 10,000 \\\hline \\\hline \$ \quad 650,000 \\\hline \\\hline 110,000 \\\hline 90,000 \\\hline 42,000 \\\hline \underline{110,000}\\\hline {\$ \quad 298,000}\\\hline \\\hline 100,800\\\hline \underline{45,000}\\\hline {\$ \quad 152,200}\\\hline\end{array}\end{array}$ What is net income if 9,000 units are sold?

• A) $152,100
• B) $152,400
• C) $137,300
• D) $122,400

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Definitions:

Vividly Imagines

Refers to the ability to create intense, clear, and detailed images in one’s mind.

Placebo Effect

The beneficial effect on a person's health that arises from the person's expectations rather than from the actual treatment.

Spontaneous Recovery

A phenomenon in classical conditioning where a previously extinguished response re-emerges after a period of no exposure to the conditioned stimulus.

Overestimate

Assessing something as more significant, valuable, or numerous than it actually is.