Static and Flexible BudgetsGraham Corporation used the following data to evaluate its current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. ActualBudgetedUnits sold 400,000$430,000Variable costs $1,250,000$1,500,000Fixed costs $1.500,000$1,290,000 a. Prepare the actual income statement, flexible budget, and static budget.Do not use negative signs with any of your answers below. Actual ResultsFlexible BudgetStatic BudgetUnits sold Revenues Variable costs Contribution margin Fixed costs Operating income For questions b., c., and d., do not use negative signs with your answers. Select either U for Unfavorable or F for Favorable using the drop down box next to each of your variance answers.b. What is the static-budget variance of revenues?$Answer 19 Answer 20 c. What is the flexible budget variance for variable costs?$Answer 21 Answer 22 d. What is the flexible budget variance for fixed costs?$Answer 23 Answer 24

Requirement A:Preparation of actual result, flexible budget, and the static budget statement as…

Answered: Static and Flexible BudgetsGraham…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 15EA: Cold X, Inc. uses this information when preparing their flexible budget: direct materials of $2 per...

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Static and Flexible Budgets
Graham Corporation used the following data to evaluate its current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit.

	Actual	Budgeted
Units sold	400,000	$430,000
Variable costs	$1,250,000	$1,500,000
Fixed costs	$1.500,000	$1,290,000

a. Prepare the actual income statement, flexible budget, and static budget.

Do not use negative signs with any of your answers below.

		Actual Results	Flexible Budget	Static Budget
Units sold
Revenues
Variable costs
Contribution margin
Fixed costs
Operating income

For questions b., c., and d., do not use negative signs with your answers. Select either U for Unfavorable or F for Favorable using the drop down box next to each of your variance answers.

b. What is the static-budget variance of revenues?

$Answer 19

Answer 20

c. What is the flexible budget variance for variable costs?

$Answer 21

Answer 22

d. What is the flexible budget variance for fixed costs?

$Answer 23

Answer 24

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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