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:

Sensorimotor

Relating to or involving both sensory and motor functions, or the stage in Piaget's theory of cognitive development (from birth to about 2 years) where infants learn through sensory and motor interaction with the world.

Primary Circular Reactions

Early infantile behaviors that repeat because the infant finds them pleasurable, occurring in the sensorimotor stage of development.

Secondary Circular Reactions

Repetitive behaviors centered around the infant's own body, typically developed between 4-8 months of age, which indicate a growth in sensory and motor skills.

Tertiary Circular Reactions

The exploratory behaviors observed in infants from about 12 to 18 months of age, characterized by the purposeful adaptation of established schemas to new situations.