Asked by zachary kastner on May 07, 2024
Verified
The net operating income in the flexible budget for January would be closest to:
A) $32,823
B) $40,902
C) $32,670
D) $40,784
Net Operating Income
A financial metric that calculates a company’s income after operating expenses are subtracted but before interest and taxes are deducted.
Flexible Budget
A budget that adjusts or flexes with changes in volume or activity levels of the business, allowing for more accurate financial planning.
- Familiarize yourself with the strategies for deriving and scrutinizing net operating income.
- Register and calculate wide-ranging outlays and proceeds in both fixed and variable budget contexts.
- Discern the differences in approach between planning budgets and flexible budgets.
Verified Answer
YS
Yuvraj Singh
May 13, 2024
Final Answer :
A
Explanation : 
Net operating income = ($15.30 × 6,910)− $72,900 = $32,823
Reference: CH09-Ref13
Pickrel Corporation is an oil well service company that measures its output by the number of wells serviced.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.
When the company prepared its planning budget at the beginning of November, it assumed that 27 wells would have been serviced.However, 31 wells were actually serviced during November.
Net operating income = ($15.30 × 6,910)− $72,900 = $32,823Reference: CH09-Ref13
Pickrel Corporation is an oil well service company that measures its output by the number of wells serviced.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.
When the company prepared its planning budget at the beginning of November, it assumed that 27 wells would have been serviced.However, 31 wells were actually serviced during November.
Learning Objectives
- Familiarize yourself with the strategies for deriving and scrutinizing net operating income.
- Register and calculate wide-ranging outlays and proceeds in both fixed and variable budget contexts.
- Discern the differences in approach between planning budgets and flexible budgets.
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