Sherry and John Enterprises Are Using the Kaizen Approach to Budgeting

Multiple Choice

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows:

Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
What is the budgeted operating income for March 2018?

A) -$18,100
B) $396,550
C) -$59,403
D) $683,100