Answered: n September, Numbers Incorporated sold…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

In September, Numbers Incorporated sold 40,000 units of its only product for $460,000, and incurred a total cost of $425,000, of which $45,000 was fixed costs. The flexible budget for September showed total sales of $500,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $79,000U; and, sales volume variance, in terms of contribution margin, $47,000U.

The sales volume variance, in terms of operating income, for September was:

Multiple Choice

$47,000 unfavorable.
$32,000 unfavorable.
$149,000 unfavorable.
$20,000 unfavorable.
$95,000 unfavorable.

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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