The static budget, at the beginning of the month, for Onyx Dàƒ ©cor Company, follows

Question

Static budget:
Sales volume: 1,000 units; Sales price: $70.00 per unit
Variable costs: $32.00 per unit; Fixed costs: $37,900 per month
Operating income: $100

Actual results, at the end of the month, follows:
Actual results:
Sales volume: 970 units; Sales price: $74.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $34,400 per month
Operating income: $3,430

Calculate the flexible budget variance for sales revenue.
A) $4,470 U
B) $4,470 F
C) $3,880 U
D) $3,880 F

Answer 1

D .D)
Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget
Units/Volume 970 0 970 30 U $1,000
Sales Revenue* $71,780 $3,880 F $67,900 $2,100 U $70,000
Variable Costs** 33,950 2,910 U 31,040 $960 F 32,000
Contribution Margin $37,830 $970 F $36,860 $1,140 U $38,000
Fixed Costs 34,400 3,500 F 37,900 $0 37,900
Operating Income/(Loss) $3,430 $4,470 F -$1,040 $1,140 U $100

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