Q#1 Sassy company sells its widgets for $20 each. its variable cost is $13 per w

Question

Q#1
Sassy company sells its widgets for $20 each. its variable cost is $13 per widget. fixed costs are $150,000 per month for volumes up to 70,000 widgets. Above 70,000 widgets, monthly fixed costs are $200,000. what is the budgeted operating income at a level of 60,000 widgets per month?
a. $270,000
b.$330,000
c. $480,000
d. $1,200,000
Q#2
(True/False)
comparing company results against industry benchmarks is often more useful than comparing actual results against budget amounts. T/F ?
Q#3
Decentralization helps keep a company's costs down since each business unit may have its own purchasing department T/F ?
Thank you!

Explanation / Answer

1) Solution: 270,000
Working: [(20-13) * 60,000] - 150,000 = 270,000
2) False
Explanation: Budgeted performance is more useful than benchmarks

3) False
Explanation: The volume derived from bulk purchasing from one central purchasing department i.e. centralized purchasing reduces the per unit purchase

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