What is the static budget variance of operating

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Chapter 4 / Exercise 8
Discrete Mathematics With Applications
Epp
Expert Verified
14) What is the static-budget variance of operating income? A) \$238,000 favorable B) \$238,000 unfavorable C) \$235,000 favorable D) \$235,000 unfavorable Answer: Explanation: B) ActualStatic Static-budgetResultsBudgetVarianceUnits sold280,000275,000Revenues\$3,080,000\$3,300,000\$(220,000)UVariable costs900,000885,000(15,000)UContribution margin \$2,180,000\$2,415,000235,000Fixed costs55,00052,0003,000UOperating income\$2,125,000\$2,363,000\$238,000U
B
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Diff: 3Objective: 1AACSB: Application of knowledge15) Regier Company had planned for operating income of \$10 million in the master budget but actually achieved operating income of only \$7 million.
BDiff: 2Objective: 1AACSB: Analytical thinking16) A master budget is called a static budget because it is developed around a single planned output level.
Diff: 1Objective: 1AACSB: Analytical thinking17) When considered in isolation, a favorable variance decreases operating income relative to the budgeted amount.
Diff: 2Objective: 1AACSB: Application of knowledge6
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Chapter 4 / Exercise 8
Discrete Mathematics With Applications
Epp
Expert Verified
18) A variance is the difference between the actual cost for the current and expected (or budgeted) performance.
Diff: 2Objective: 1AACSB: Analytical thinking19) A favorable variance results when actual costs exceed budgeted costs.
Diff: 2Objective: 1AACSB: Analytical thinking20) Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun) and placing less attention on areas operating as anticipated.
Diff: 1Objective: 1AACSB: Analytical thinking21) A favorable variance indicates that budgeted costs are less than actual costs.
Diff: 2Objective: 1AACSB: Analytical thinking22) A favorable variance should be ignored by management.
Diff: 1Objective: 1AACSB: Analytical thinking