Nicolaysen Corporation manufactures and sells a single product. The company uses

Question

Nicolaysen Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 5,700 units, but its actual level of activity was 5,690 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February:

Data used in budgeting:

Actual results for February:

1. The net operating income in the planning budget for February would be closest to:

2. The direct labor in the planning budget for February would be closest to:

Please show your work

Fixed element per month variable element per unit Revenue ---- $36.80 Direct Labor $0 $3.70 Direct Materials 0 $17.80 Manufacturing Overhead 30,500 $1.20 Selling & Administrative Expenses 26,800 $0.30 Total Expenses $57,300 $23.00

Explanation / Answer

1.

1. Net operating income in the planning budget for February = $21,360

2. Direct labor in the planning budget for February = $21,090

Particulars Amount Revenue (5,700 * $36.80) $209,760 Less Direct Labor (5700* 3.70) ($21,090) Direct Materials (5700* $17.80) ($101,460) Manufacturing Overhead (30,500 + 5700*1.20) ($37,340) Selling & Administrative Expenses (26,800 + 5700*0.30) ($28,510) Net income $21,360

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