Infinity Clock Company Prepared the Following Static Budget for the Year

question 197

Multiple Choice

Infinity Clock Company prepared the following static budget for the year: $$\begin{array} { | l | c | r | } \hline \textbf { Static Budget } & & \\\hline \text { Units/Volume } & & 9000 \\\hline & \text { Per Unit } & \\\hline \text { Sales Revenue } & \$ 5.00 & \$ 45,000 \\\hline \text { Variable Costs } & 1.50 & \underline{13,500}_{} \\\hline \text { Contribution Margin } & & 31,500 \\\hline \text { Fixed Costs } & & \underline{3000} \\\hline \text { Operating Income/(Loss) } & & \underline{\underline{\$ 28,500}}_{} \\\hline\end{array}$$ If a flexible budget is prepared at a volume of 8900 units,calculate the amount of operating income.The production level is within the relevant range.

• A)$28,150
• B)$28,500
• C)$13,350
• D)$3000

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Definitions:

Hidden Variables

Variables that are not directly observed but are relevant or influence the outcome of a process or model.

Two Variables

Refers to any analytical or statistical approach that involves two distinct or dependent variables for examination or study.

Scatter Diagram

A graphical representation of data using Cartesian coordinates to display values for two variables for a set of data, helping to show the relationship between them.

Approximate Class Width

An estimated value for the range of each category in a frequency distribution.