Kern Company Prepared the Following Tentative Budget for Next Year

question 131

Multiple Choice

Kern Company prepared the following tentative budget for next year:
$\begin{array}{|l|r|}\hline \text { Sales } & \$ 500,000 \\\hline \text { Selling price } & \$ 5 \text { per unit } \\\hline \text { Variable expenses } & \$ 300,000 \\\hline \text { Fixed expenses } & \$ 150,000 \\\hline\end{array}$
The sales manager argues that the unit selling price could be increased by 20%,with an expected volume decrease of only 10%.If Kern incorporates these changes in its budget,what should be the budgeted operating income?

• A) $66,000.
• B) $90,000.
• C) $120,000.
• D) $145,000.

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Definitions:

Evil Motive

The intention to cause harm or perform actions for malicious reasons, often underlying criminal or unethical behavior.

Punitive Damages

Monetary compensation awarded in a lawsuit that goes beyond what is necessary to compensate the plaintiff and is intended to punish the defendant for egregious behavior and deter similar conduct in the future.

Constitution

The foundational legal document that establishes the framework of a government, outlining the structure, powers, and limitations of government institutions.

Grossly Excessive

Describes an amount or action that is much more than what is reasonable or appropriate.