Jones Company Developed the Following Static Budget at the Beginning

question 115

Multiple Choice

Jones Company developed the following static budget at the beginning of the company's accounting period: $$\begin{array} { l r } \text { Revenue } ( 8,000 \text { units } ) & \$ 16,000 \\\text { Variable costs } & \underline{4,000} \\\text { Contribution margin } & \$ 12,000 \\\text { Fixed costs } & \underline{ 4,000 }\\\text { Net income } & \underline{ \$ 8,000} \\\end{array}$$ If actual production totals 8,200 units,the flexible budget would show total costs of:

• A) $8,000.
• B) $8,100.
• C) $8,200.
• D) None of these are correct.

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Definitions:

Functional Areas

Specific categories within a business or organization that are responsible for distinct tasks, such as marketing, finance, or human resources.

Objective And Task Method

A budgeting method where specific objectives are set first, and then tasks are determined to achieve these objectives, with costs attached to these tasks.

Percentage Of Ad Spend Method

A budgeting strategy for advertising where the allocation is based on a fixed percentage of sales or projected sales revenue.

Strategic Planning Process

A systematic approach to defining a business strategy, including setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions.