The static budget, at the beginning of the month, for Assembly Furniture Company follows
Static budget:
Sales volume: 1,100 units; Sales price: $71.00 per unit
Variable costs: $33.00 per unit; Fixed costs: $36,400 per month
Operating income: $5,400
Actual results, at the end of the month, follows:
Actual results:
Sales volume: 980 units; Sales price: $75.00 per unit
Variable costs: $36.00 per unit; Fixed costs: $33,500 per month
Operating income: $4,720
Calculate the sales volume variance for fixed costs.
A) $2,940 U
B) $2,900 F
C) $4,560 U
D) $0
D .D)
Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget
Units 980 0 980 120 U $1,100
Sales Revenue* $73,500 $3,920 F $69,580 $8,520 U $78,100
Variable Costs** 35,280 2,940 U 32,340 $3,960 F 36,300
Contribution Margin $38,220 $980 F $37,240 $4,560 U $41,800
Fixed Costs 33,500 2,900 F 36,400 $0 36,400
Operating Income/(loss) $4,720 $3,880 F $840 $4,560 U $5,400
* Sales price per unit x Units
** Variable cost per unit x Units
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