Question

The static budget, at the beginning of the month, for Onyx Décor Company, follows: Static budget: Sales volume: 1,100 units; Sales price: $70.00 per unit Variable costs: $32.00 per unit; Fixed costs: $38,000 per month Operating income: $3,800 Actual results, at the end of the month, follows: Actual results: Sales volume: 980 units; Sales price: $75.00 per unit Variable costs: $35.00 per unit; Fixed costs: $34,200 per month Operating income: $5,000 Calculate the flexible budget variance for sales revenue.

Answer 1

The flexible budget variance for sales revenue are 30 Units.

Step-by-step explanation:

It means that with this cost structure the company still could have lower sales until 950 Units and still keep the result forecasted in the Budget.

Variance

BDGT - REAL - REAL

Sales 1.100 - 980 - 950

Unit $70 - $75 - $75

Cost $32 - $35 - $35

==============================

$41.800 $39.200 $38.000

Fixed -$38.000 -$34.200 -$34.200

Result $3.800 $5.000 $3.800