Sherry and John Enterprises Are Using the Kaizen Approach to Budgeting

question 114

Multiple Choice

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018.The budgeted income statement for January 2018 is as follows:

Under the kaizen approach,cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
What is the budgeted operating income for March 2018?

• A)-$18,100
• B)$396,550
• C)-$59,403
• D)$683,100

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Definitions:

Capital Investment Analysis

The process of evaluating and selecting long-term investments consistent with the firm's goal of wealth maximization.

Cash Payback Period

the duration required to recover the cost of an investment through cash flows generated by the investment.

Annual Net Cash Inflow

The net amount of cash that flows into a company in a year after all expenses and outflows have been subtracted from total inflows.

Capital Rationing

The process of selecting the most profitable projects to invest in when a company has limited resources or capital available.