Evergreen Corporation Manufactures Circuit Boards and Is in the Process

question 96

Multiple Choice

Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget.The pro forma income statement for the current year is presented below. $$\begin{array} { | l | l | l | } \hline \text { Sales } & & \$ 3,500,000 \\\hline \text { Cost of sales: } & & \\\hline \text { Direct Material } & \$ 500,000 & \\\hline \text { Direct labor } & 250,000 & \\\hline \text { Variable Overhead } & 275,000 & \\\hline \text { Fiked Overhead } & \underline { 600,000 } & 1,625,000 \\\hline \text { Gross Profit } & & \$ 1,876,000 \\\hline \text { Selling and General \& Admin. Exp. } & & \\\hline \text { Variable } & 750,000 & \\\hline \text { Fiked } & 250,000 & 1,000,000 \\\hline \text { Operating Income } & & \$ 875,000 \\\hline\end{array}$$
For the coming year,the management of Evergreen Corporation anticipates a 5 percent decrease in sales,a 10 percent increase in all variable costs,and a $45,000 increase in fixed costs.
The operating profit for next year would be:

• A) $477,500.
• B) $492,500.
• C) $552,500.
• D) $831,250.

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Definitions:

Cardiac Output

The volume of blood pumped by the left ventricle into the aorta in 1 minute.

Stroke Volume

The volume of blood pumped by one ventricle during one contraction.

Heart Rate

The number of heart beats per minute, a measure of the heart's activity and an important indicator of health and fitness.

Systemic Circulation

Refers to the part of cardiovascular circulation which carries oxygenated blood away from the heart to the body, and returns deoxygenated blood back to the heart.