The starting point in the budgeting process is the A) preparation of the cash bu

Question

The starting point in the budgeting process is the A) preparation of the cash budget 3) preparation of the budgeted statement of cash flows preparation of the sales budget preparation of the budgeted income statement A) It is relevant to a decision because it changes depending on the alternative course of action selected Which of the following describes a sunk cost? B) An outlay expected to be incurred in the future, A historical cost is always irrelevant ) A historical cost that may be relevant. of the following describes the products and services of companies that are price- setters? 3) They tend to be unique. ) They tend to be commodities. They are priced by managers using a target-pricing emphasis. They tend to have a lot of competitors. .Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, and is currently producing and selling 20,000 sails per year. The following information relates to current production: Sale price per unit Variable costs per unit: Manufacturing Marketing and administrative 150 $55 $25 Total fixed costs: Manufacturing $640,000 $280,000 Marketing and administrative If a special sales order is accepted for 5,000 sails at a price of $125 per unit, and fixed costs remain unchanged, what is the change in operating income? A) Operating income decreases $5,000. B) Operating income increases $190,000. C) Operating income decreases $125,000. D) Operating income increases $225,000.

Explanation / Answer

1. C Preparation of Sales Budget

2. C A historic cost is always irrelavent

3. B. They tend to be unique

4. D. Operating cost increase by 225000

6. Ans A 87700

Sales
5000*125 625000 Less:Variable cost
Manufacturing 400000 Contribution 225000

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