The Following Is a Summarized Master Budget That Winnipeg Company

question 79

Multiple Choice

The following is a summarized master budget that Winnipeg Company prepared for January:
$\begin{array}{|l|r|r|}\hline \text { Sales } & & 9,000 \text { units } \\\hline \text { Sales revenue } & \$ 450,000 \\\hline \text { Less variable costs: } & & \\\hline \text { Manufacturing } & \$ 270,000 & \\\hline \text { Selling and administrative } & \underline{18,000} & \underline{288,000} \\\hline \text { Contribution } & & \$ 162,000 \\\hline \text { Less fixed costs: } & & \\\hline \text { Manufacturing } & 72,000 & \\\hline \text { Selling and administrative } & \underline{27,000} & \underline{99,000} \\\hline \text { Operating income } & & \$ 63,000 \\\hline\end{array}$

$\text { Actual results for January were as follows: }$

$\begin{array}{|l|r|}\hline \text { Units produced and sold } & 8,500 \text { units } \\\hline \text { Selling price per unit } & \$ 55.00 \\\hline \text { Variable costs per unit: } & \\\hline \text { Manufacturing } & \$ 32.00 \\\hline \text { Selling and administrative } & \$ 1.50 \\\hline \text { Total fixed costs } & \$ 99,000\\\hline\end{array}$

-What was the flexible budget operating income (loss) for Winnipeg Company for January?

• A) $83,750.
• B) $54,000.
• C) $63,000.
• D) $59,500.

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Definitions:

Vocal Cords

Folds of tissue in the throat that vibrate and produce sound when air is expelled from the lungs, enabling speech.

High Pitch

Frequencies of sound that are higher and usually perceived as sharper by the human ear.

Gestalt Psychology

A theory of mind which posits that psychological phenomena must be viewed as organized, structured wholes (Gestalts) rather than the sum of their parts.

Principle

A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.