Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting:
Actual results for December:
The net operating income in the flexible budget for December would be closest to:
A) $16,430
B) $16,994
C) $11,795
D) $11,974

Question

Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting:
 Actual results for December:
 The net operating income in the flexible budget for December would be closest to:
A) $16,430 
B) $16,994 
C) $11,795 
D) $11,974

Quizplus · Accepted Answer

11eacbfc_c579_27e1_8ffe_6fdb15a0c092_TB7552_00 Net operating income = ($14.10 × 5,340) − $58,300 = $16,994

Neubert Corporation Manufactures and Sells a Single Product