Kevin Company Prepared the Following Static Budget for the Year

question 52

Multiple Choice

Kevin Company prepared the following static budget for the year 2015: $$\begin{array} { | l | c | r | } \hline \text { Static Budget } & & \\\hline \text { Units/volume } & & 5,000 \\\hline & \text { Per Unit } & \\\hline \text { Sales revenue } & \$ 3.00 & \$ 15,000 \\\hline \text { Variable expenses } & \$ 1.50 & 7,500 \\\hline \text { Contribution margin } & & 7,500 \\\hline \text { Fixed expenses } & & 4,000 \\\hline \text { Operating income/(loss) } & & \$ 3,500 \\\hline\end{array}$$ If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income.

• A) $3,500
• B) $10,500
• C) $6,500
• D) $4,000

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Definitions:

Finance Charges

Costs associated with borrowing money, including interest rates, late fees, and other charges applied to a loan or credit.

Adjustment Code

Used in billing and accounting to denote corrections or modifications made to a patient's account in healthcare settings.

Canceled Account Balance

The remaining amount of money in an account that has been closed or terminated.

Collection Letters

Written notices sent by creditors to debtors requesting payment of overdue balances.