n Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit. Actual Budgeted Units sold 43,000 units 33,000 units Variable costs $166,000 $150,000 Fixed costs $41,000 $58,000 What is the static-budget variance of operating income?
n Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit. Actual Budgeted Units sold 43,000 units 33,000 units Variable costs $166,000 $150,000 Fixed costs $41,000 $58,000 What is the static-budget variance of operating income?
Chapter1: Financial Statements And Business Decisions
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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.
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Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit.
|
|
Actual
|
Budgeted
|
|
Units sold
|
43,000 units
|
33,000 units
|
|
Variable costs
|
$166,000
|
$150,000
|
|
Fixed costs
|
$41,000
|
$58,000
|
What is the static-budget variance of operating income?
$164,000 unfavorable
$181,000 favorable
$181,000 unfavorable
$164,000 favorable
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