Question

The Leonid Company master budget, which was based on planned activity of 42,000 units, resulted in a profit of $140,000. The company's flexible budget, which was based on actual activity of 40,000 units, resulted in a profit of $136,000. Actual profits, which resulted from the actual activity of 40,000 units, were $139,000. What was the company's sales activity (or sales volume) variance?

Answer 1

$1,000 unfavorable

Step-by-step explanation:

The sales activity variance is the difference between budgeted profit and the actual profit. This year's master budget estimated a $140,000 profit and the actual profit for the year was $139,000. This means that the variance was -$1,000 (= $139,000 - $140,000), or $1,000 unfavorable.