1

Barnes Company expects to begin operating on January 1. The company's master budget contained the following operating expense budget: Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of accumulated depreciation appearing on the company's March 31 pro forma balance sheet is:

$1,000.

$2,000.

$3,000.

$12,000.

2

Bates Company plans to add a new item to its line of consumer product offerings. Two possible products are under consideration. Each unit of Product A costs $6 to produce and has a contribution margin of $3, while each unit of Product B costs $12 and has a contribution margin of $4. What is the differential revenue for this decision?

$7

$1

$6

$9

.3

Relevant costs are often referred to as:

Unavoidable costs

Differential costs

Sunk costs

All of these

$ Salary expense Sales commissions, 5% of sales Utilities Depreciation on store equipment Rent Miscellaneous Total operating expenses January February 36,000$ 36,000 $ 30,000 32,000 2,800 2,800 1,000 1,000 7,200 7,200 1,800 1,800 78,800 $ 80,800 $ March 36,000 24,000 2,800 1,000 7,200 1,800 72,800 $