10. The static budget, at the beginning of the month, for Beacon Banner Company
ID: 2535751 • Letter: 1
Question
10.
The static budget, at the beginning of the month, for Beacon Banner Company follows:
Static budget:
Sales volume: 1100 units; Sales price: $70.00 per unit
Variable costs: $33.00 per unit; Fixed costs: $37,800 per month
Operating income: $2900
Actual results, at the end of the month, follows:
Actual results:
Sales volume: 995 units; Sales price: $75.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $35,000 per month
Operating income: $4800
Calculate the sales volume variance for revenue.
Select one:
A. $7350 U
B. $4975 F
C. $2800 U
D. $3885 U
11.
The static budget, at the beginning of the month, for Divine Décor Company, follows:
Static budget:
Sales volume: 1500 units; Sales price: $70.00 per unit
Variable costs: $32.00 per unit; Fixed costs: $38,000 per month
Operating income: $19,000
Actual results, at the end of the month, follows:
Actual results:
Sales volume: 990 units; Sales price: $75.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $33,000 per month
Operating income: $6600
Calculate the flexible budget variance for sales revenue.
Select one:
A. $6980 F
B. $4950 F
C. $4950 U
D. $6980 U
14.
Worldwide Logistics provides the following information:
What is the company's residual income?
Select one:
A. $600,000
B. $900,000
C. $500,000
D. $1,550,000
Operating income $1,500,000 Net sales $14,000,000 Average total assets $2,000,000 Management's target rate of return 30%Explanation / Answer
10.
Flexible budget revenues = 995 units * 70 per unit = 69,650
Static budget revenues = 1,100 units * 70 = 77,000
Sales volume variance = Flexible budget amount - Static budget amount
= 69,650 - 77,000
= 7,350 U
The answer is A.
11.
Actual revenues = 990 units * 75 per unit = 74,250
Flexible budget revenues = 990 units * 70 per unit = 69,300
Flexible budget variance for sales revenue = Actual revenues - Flexible budget revenues
= 74,250 - 69,300
= 4,950 F
The answer is B
14.
Residual income = Net income - (Average total assets * Target rate of return)
= 1,500,000 - (2,000,000 * 30%)
= 1,500,000 - 600,000
= 900,000
The answer is B.
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