The static budget, at the beginning of the month, for Singleton Company follows

Question

Static budget:
Sales volume: 1,000 units; Sales price: $70.00 per unit
Variable costs: $32.00 per unit; Fixed costs: $35,500 per month
Operating income: $2,500

Actual results, at the end of the month, follows:
Actual results:
Sales volume: 980 units; Sales price: $74.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $33,300 per month
Operating income: $4,920

Calculate the flexible budget variance for fixed costs.
A) $2,200 U
B) $2,200 F
C) $0
D) $3,180 F

Answer 1

B .B)
Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget
Units 980 0 980 20 U $1,000
Sales Revenue* $72,520 3,920 F $68,600 $1,400 U $70,000
Variable Costs** 34,300 2,940 U 31,360 $640 F 32,000
Contribution Margin $38,220 $980 F $37,240 $760 U $38,000
Fixed Costs 33,300 2,200 F 35,500 $0 35,500
Operating Income/(Loss) $4,920 $3,180 F $1,740 $760 U $2,500

* Sales price per unit x Units
** Variable cost per unit x Units