THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 48 THROUGH 50.
Abernathy Corporation used the following data to evaluate their current operating system.
The company sells items for $10 each and used a budgeted selling price of $10 per unit.
Actual
Budgeted
Units sold
92,000 units
90,000 units
Variable costs
$450,800
$432,000
Fixed costs
$
95,000
$100,000
48
.
What is the static-budget variance of revenues?
a.
$20,000 favorable
b.
$20,000 unfavorable
c.
$2,000 favorable
d.
$2,000 unfavorable
Answer
:
a
Difficulty
:
2
Objective
:
1
(92,000 units x $10) - (90,000 units x $10) = $20,000 F
49.
What is the static-budget variance of variable costs?
a.
$1,200 favorable
b.
$18,800 unfavorable
c.
$20,000 favorable
d.
$1,200 unfavorable
Answer
:
b
Difficulty
:
2
Objective
:
1
$450,800 - $432,000 = $18,800 U
50
.
What is the static-budget variance of operating income?
a.
$3,800 favorable
b.
$3,800 unfavorable
c.
$6,200 favorable
d.
$6,200 unfavorable
Answer
:
c
Difficulty
:
2
Objective
:
1
Actual
Static
Static-budget
Results
Budget
Variance
Units sold
92,000
90,000
Revenues
$920,000
$900,000
$20,000
F
Variable costs
450,800
432,000
18,800
U
Contribution margin
$469,200
$468,000
$1,200
F
Fixed costs
95,000
100,000
(5,000
)
F
Operating income
$374,200
$368,000
$6,200
F
Chapter 7
Page 3