The following static budget is provided: What will budgeted net income equal if 21,000 units are produced and sold? (Do not round intermediate calculations.)
A)$53,550
B)$55,500
C)$94,500
D)$210,000

Question

The following static budget is provided: What will budgeted net income equal if 21,000 units are produced and sold? (Do not round intermediate calculations.) 
A)$53,550 
B)$55,500 
C)$94,500 
D)$210,000

Quizplus · Accepted Answer

To determine budgeted net income, we need to calculate total revenues and total expenses for producing and selling 21,000 units.

Total revenues = (21,000 units x $15) = $315,000 
Total variable expenses = (21,000 units x $8) + (21,000 units x $2) = $189,000 (direct materials + direct labor) 
Total fixed expenses = $60,000 
Total expenses = $189,000 + $60,000 = $249,000

Therefore, budgeted net income = total revenues - total expenses = $315,000 - $249,000 = $66,000

The closest answer choice is B) $55,500. However, this does not match the calculated budgeted net income.

The Following Static Budget Is Provided: What Will Budgeted Net