Border Corporation is a service company that measures its output
by the number of customers served.
The company has provided the following fixed and variable cost
estimates that it uses for budgeting
purposes.
Fixed Element per Month
Variable Element per Customer Served
Revenue
$
4,200
Employee salaries and wages
$
41,300
$
1,200
Travel expenses
$
500
Other expenses
$
33,000
When the company prepared its planning budget at the beginning of
July, it assumed that 33
customers would have been served. The amount shown for net
operating income in the planning
budget for July would have been:
a. ($4,300).
b. ($1,414).
c. ($1,200).
d. $8,200.
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