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
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