Dahl Manufacturing Is Making Its Operating Budget for the 4^th

question 81

Multiple Choice

Dahl Manufacturing is making its operating budget for the 4^th quarter of 2012. Sales are forecast at $60,000 in October, $65,000 in November, and $70,000 in December. Cost of goods sold it 40% of sales. Expenses are budgeted as follows:
$$\begin{array} { l l l } \text { Variable: } & \text { Miscellaneous: } & 5 \% \text { of sales } \\\text { Fixed: } & \text { Salary expense: } & \$ 12,600 \text { per month } \\& \text { Rent expense: } & \$ 5,200 \text { per month } \\& \text { Depreciation expense: } & \$ 4,000 \text { per month } \\& \text { Admin expense: } & \$ 5,000 \text { per month }\end{array}$$
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How much is the net operating income/(loss) in November?

• A) $6,200
• B) $11,700
• C) $7,480
• D) $8,950

Recognize the effects of the global economy on business operations and individual workers.

Understand the processes of empowerment and decentralization in decision-making.

Comprehend the relevance of campaign financing and legal issues in corporate governance.

Analyze the importance and impact of business cycles on managerial decisions and business performance.

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Definitions:

Net Operating Income

A company's operating income after all operating expenses, excluding taxes and interest, have been deducted.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and manufacturing overhead) in the cost of a product.

Total Period Cost

The sum of all costs incurred by a business during a specified period, excluding product costs.

Variable Costing

An accounting method that only includes variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.