Answer the Following Questions Using the Information Below:
Margaret River

question 165

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 gross margin for March 2018?

• A)$198 000
• B)$196 020
• C)$204 020
• D)$209 950

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