Question

Lehnertz 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 7,100 units, but its actual level of activity was 7,150 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:

	Fixed element per month			Variable element per unit
Revenue		−		$	27.70
Direct labor	$	0		$	4.10
Direct materials		0			10.80
Manufacturing overhead		34,000			1.20
Selling and administrative expenses		21,800			0.70
Total expenses	$	55,800		$	16.80

Actual results for February:

Revenue	$	205,485
Direct labor	$	29,365
Direct materials	$	74,980
Manufacturing overhead	$	43,020
Selling and administrative expenses	$	27,505

The net operating income in the flexible budget for February would be closest to:

A) $21,590

B)  $30,401

C) $30,831

D) 22,135

Answer 1