A Packaging Company Produces Cardboard Boxes in an Automated Process

question 10

Multiple Choice

A packaging company produces cardboard boxes in an automated process. The required direct materials costs $0.30 per unit. Fixed manufacturing overhead costs are budgeted at $24,000 per month and are allocated based on units of production. The budgeted contribution margin per unit is $0.85, and administration fixed costs are budgeted at $7,500 per month.What is the flexible-budget amount for operating income for 40,000 and 20,000 units, respectively?

• A) $26,000; $20,000
• B) $36,000; $30,000
• C) $44,000; $38,000
• D) $2,500; <$14,500>

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Definitions:

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A type of merger where two or more companies in unrelated business activities or industries combine.

ALCOA Case

A landmark antitrust case against the Aluminum Company of America (ALCOA), emphasizing legal issues related to monopolies and market competition.

Rule of Reason

A legal doctrine used in antitrust law that evaluates business practices based on their overall circumstances and their impact on competition, rather than deeming them inherently illegal.