Hammes Corporation Manufactures and Sells a Single Product

question 16

Multiple Choice

Hammes Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During February, the company budgeted for 5, 500 units, but its actual level of activity was 5, 510 units.The company has provided the following data concerning the formulas to be used in its budgeting: The activity variance for net operating income in February would be closest to:

• A)$191 U
• B)$1, 651 U
• C)$191 F
• D)$1, 651 F

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Definitions:

Notes Receivable

A financial asset representing a promise to pay a specific amount of money, plus interest, to the holder of the note at a future date.

NSF Check

Non-Sufficient Funds Check; a check that cannot be processed because the account on which it is drawn does not have enough funds.

Bank Service Charges

Fees charged by banks for various services such as account maintenance, transactions, and overdrafts.

Other Income

Comprises earnings from sources other than the main business activities, such as interest, dividends, or rental income.