Answer the Following Questions Using the Information Below:
Margaret River

question 69

Multiple Choice

Answer the following questions using the information below:
Margaret River Enterprises are using the kaizen approach to budgeting for 2018.The budgeted income statement for January 2018 is as follows:
$\begin{array}{lr}\text { Sales (84 000 units) } & \$ 700000 \\\text { Less: Cost of goods sold } & \underline{500000} \\& \\\text { Gross margin } & 200000 \\\text { Operating expenses (includes } \$ 50000 \text { of fixed costs) } & \underline{150000} \\& \\\text { Operating profit } & \$ 50000\end{array}$
Under the kaizen approach,cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
-What is budgeted cost of goods sold for March 2018?

• A)$490 050
• B)$500 000
• C)$297 000
• D)$294 000

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Definitions:

MSC (Marginal Social Cost)

The total cost to society of producing an additional unit of a good or service, including both the private costs and any external costs.

Efficient Level

Refers to the point at which a system, process, or economy operates at maximum productivity with minimal waste and expense.

External Costs

Costs that are not borne by the producer or consumer of a good or service, but by society as a whole, such as pollution.

Negative Externality

A cost that affects someone who did not choose to incur that cost or participate in the action causing it, often seen in pollution where the public pays the price for private industry actions.