The accounting department of a sports drink bottling company is checking to see whether the actual expenses of a department differ from the budgeted expenses by more than $500 or by more than 5%. Fill in the missing parts of the table, and determine whether each actual expense passes the "budget variance test." ? Bubget Expense, b Actual Expense, a |a - b| 0.05b Insurance $2575 $2675 ? ?

Question

A. Insurance: |a - b| = 100, 0.05b = 50Because the difference between the actual expense and the budget is less than $500 and greater than 5% of budgeted amount there is compliance with the budget variance test.
B. Insurance: |a - b| = 100, 0.05b = 128.75Because the difference between the actual expense and the budget is greater than $500 and greater than 5% of budgeted amount there is compliance with the budget variance test.
C. Insurance: |a - b| = 100, 0.05b = 128.75Because the difference between the actual expense and the budget is less than $500 and less than 5% of budgeted amount there is compliance with the budget variance test.
D. Insurance: |a - b| = 100, 0.05b = 128.75Because the difference between the actual expense and the budget is $500 and greater than 5% of budgeted amount there is compliance with the budget variance test.
E. Insurance: |a - b| = 100, 0.05b = 128.75Because the difference between the actual expense and the budget is greater than $500 and less than 5% of budgeted amount there is compliance with the budget variance test.

Answer 1

Answer: C