Letts Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 6,970 units. The company has provided the following data concerning the formulas to be used in its budgeting:

-The net operating income in the planning budget for January would be closest to:
A)$20,292
B)$12,988
C)$20,700
D)$12,877

Question

Letts Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 6,970 units. The company has provided the following data concerning the formulas to be used in its budgeting:

-The net operating income in the planning budget for January would be closest to:

-The net operating income in the planning budget for January would be closest to:
A)$20,292 
B)$12,988 
C)$20,700 
D)$12,877

Quizplus · Accepted Answer

To calculate net operating income, we need to subtract total expenses from total revenue. In this scenario, the planning budget for January shows total revenue of $70,000 and total expenses of $49,300. Therefore, the net operating income would be:

$70,000 - $49,300 = $20,700

Therefore, the best choice is C.

Letts Corporation Manufactures and Sells a Single Product