In September, Larson Inc. sold 50,000 units of its only product for $317,000, and incurred a total cost of $295,000, of which $32,000 was fixed costs. The flexible budget for September showed total sales of $370,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $77,000U; and, sales volume variance, in terms of contribution margin, $34,000U. The amount of operating income in the flexible budget (FB) for September, to the nearest dollar, was: Multiple Choice $66,000. $58,000. $99,000. $50,000. $91,000.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
In September, Larson Inc. sold 50,000 units of its only product for $317,000, and incurred a total cost of $295,000, of which $32,000 was fixed costs. The flexible budget for September showed total sales of $370,000. Among variances of the period were: total variable cost flexible-
The amount of operating income in the flexible budget (FB) for September, to the nearest dollar, was:
-
$66,000.
-
$58,000.
-
$99,000.
-
$50,000.
-
$91,000.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
