Ibis Company Prepared the Following Static Budget for the Month

question 40

Multiple Choice

Ibis Company prepared the following static budget for the month of November, 2015: $$\begin{array} { | l | c | r | } \hline \text { Static Budget } & & \\\hline \text { Units/volume } & & 12,000 \\\hline & \underline { \text { Per Unit } } & \\\hline \text { Sales revenue } & \$ 20 & \$ 240,000 \\\hline \text { Variable expenses } & \underline { \$ 8 } & \underline { - 96,000 } \\\hline \text { Contribution margin } & & 144,000 \\\hline \text { Fixed expenses } & & \underline { - 130,000 } \\\hline \text { Operating income/(loss) } & & \$ \mathbf { 1 4 , 0 0 0 } \\\hline\end{array}$$ If a flexible budget was prepared at a volume of 13,000 units, calculate the operating income at 13,000 units of production.

• A) $22,000
• B) $17,500
• C) $14,000
• D) $26,000

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Definitions:

Manager-Managed LLC

A limited liability company structured so that managers, rather than members, handle the daily operations.

Judicial Dissolution

The process by which a court orders the dissolution or termination of an entity, such as a corporation or partnership, based on legal grounds.

LLC

Abbreviation for Limited Liability Company, a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Transferable Interest

The portion of a member's ownership in a limited liability company (LLC) that can be transferred or sold to other parties, typically including the right to receive financial distributions.