Reference no: EM131760237

Question: Marino Company is currently selling 10,000 units of its product per month at $9.50 per unit for total monthly sales of $95,000. The company's variable expenses are $3.75 per unit and its monthly fixed expenses total $9,500. An increase in the advertising budget of $3,500 is expected to increase its monthly sales by 1,000 units for total monthly sales of $104,500. This proposal will cause net operating income to:

a.) Increase by $2,250.

b.) Increase by $3,500.

The management of Nicto Company plans to have an inventory at the end of each month equal to 30% of the next month's sales. Budgeted sales in units over the next three months are 71,000 in October, 111,000 in November, and 91,000 in December. Budgeted production for November would be:

a.) 91,000 units.

b.) 105,000 units.

Irwin Company has budgeted direct labor hours for the coming three months as follows: July, 6,400 hours; August, 8,000 hours; and September, 8,200 hours. Manufacturing overhead is budgeted at $13,200 per month plus $3.20 per direct labor hour. What is the budgeted manufacturing overhead for August?

a.) $38,800

b.) $13,200

All of the statements are correct except:

a.) to generate a favorable overall revenue and spending variance, managers must take actions to increase the prices of inputs.

b.) to generate a favorable variance for net operating income in a business, managers must take actions to increase client-visits.