Answer the Following Questions Using the Information Below:
Genent Company

question 12

Multiple Choice

Answer the following questions using the information below:
Genent Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
$\begin{array}{|l|r|r|r|r|r|}\hline &\text { Actual } & \text { Flexible Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget } \\\hline\text { Units sold } & 495,000 & & 495,000 & & 453,750 \\\hline \text { Revenues } & \$ 185,150 & \$ 4,400 \mathrm{~F} & (\mathrm{~A}) & \$ 6,160 \mathrm{U} & (\mathrm{B}) \\\hline \text { Variable } & & & & & \\\text { costs } & (\mathrm{C}) & \$ 880 \mathrm{U} & \$ 69,780 & \$ 10,300 \mathrm{~F} & \$ 88,080 \\\hline \text { Fixed costs } & \$ 36,430 & \$ 3,770 \mathrm{~F} & \$ 40,200 & 0 & \$ 40,200 \\\hline \text { Operating } & & & & & \\\text { income } & \$ 78,060 & (\mathrm{D}) & \$ 70,770 & (\mathrm{E}) & \$ 66,630\\\hline\end{array}$
-What are the actual variable costs (C) ?

• A) $72,800
• B) $70,660
• C) $62,640
• D) $54,080

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Definitions:

Unit Variable Cost

The cost associated with producing one additional unit of product, including materials, labor, and other costs that vary with production volume.

Variable Expenses

Costs that vary directly with changes in production volume or business activity levels, such as materials and labor costs.

Net Operating Income

The profit a company makes from its regular business operations, excluding deductions of interest and taxes.

Degree Of Operating Leverage

A financial metric that measures the sensitivity of a company’s operating income to its sales, indicating how revenue growth translates into growth in operating income.