Friday, May 27, 2011

What is budgeted gross margin for March 20x5?

ACCOUNTING

Multiple Choice

Dan and Donna Enterprises are using the kaizen approach to budgeting for 20x5. The budgeted income statement for January 20x5 is as follows:



Sales (84,000 units) $500,000

Less: Cost of goods sold 300,000



Gross margin 200,000

Operating expenses (includes $50,000 of fixed costs) 150,000



Operating income $ 50,000



Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.



What is budgeted gross margin for March 20x5?

a. $196,020

b. $198,000

c. $204,020

d. $205,970

Click here for the SOLUTION

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