Units sold 1000000 990000 variable costs 3000000

4

Units Sold 1,000,000 990,000
Variable Costs $3,000,000 $2,500,000
Fixed Costs $1,800,000 $1,850,000
14) What is the actual operating income for Ames Golf Company using the actual results?
D
Skill: Applying
Objective: LO 7-1
5

15) What is the budgeted operating income for Ames Golf Company?
D
Diff: 1 Type: MC
CPA Competencies: Chapter 7 -
3.2.1 Develops or evaluates information inputs for operational plans, budgets, and forecasts,
3.2.2 Prepares, analyzes, or evaluates operational plans, budgets, and forecasts,
3.2.3 Computes, analyzes, or assesses implications of variances,
3.4.1 Evaluates sources and drivers of revenue growth
Skill: Applying
Objective: LO 7-1
16) What is the total static budget variance for Ames Golf Company?
E
Diff: 2 Type: MC
CPA Competencies: Chapter 7 -
3.2.1 Develops or evaluates information inputs for operational plans, budgets, and forecasts,
3.2.2 Prepares, analyzes, or evaluates operational plans, budgets, and forecasts,
3.2.3 Computes, analyzes, or assesses implications of variances,
3.4.1 Evaluates sources and drivers of revenue growth
Skill: Applying
Objective: LO 7-1
6

17) A company uses a static budget approach and the previous management accountant calculated the
following information: Fixed costs variance $10,000 U; revenues variance $400,000 F; contribution margin
variance $60,000 F. What is the total static-budget variance?
A) $50,000 F
B) $50,000 U
C) $230,000 F
D) $230,000 U
E) $390,000 F
Answer:
Explanation: $60,000 F - $10,000 U = $50,000 F
A