Answer the following questions using the information below: ABC Corp. used the f

Question

Answer the following questions using the information below:

ABC Corp. used the following data to evaluate its current operating system.

The company sells items for $21 each and used a budgeted selling price of $21 per unit.

                                                                   Actual             Budgeted

        Units sold                           180,000 units      185,000 units

        Variable costs                         $1,080,000           $1,295,000

        Fixed costs                                 $ 800,000              $ 775,000

1) What is the static-budget variance of revenues?

A) $105,000 favorable

B) $105,000 unfavorable

C) $8,000 favorable

D) $8,000 unfavorable

2) What is the static-budget variance of variable costs?

A) $25,000 favorable

B) $25,000 unfavorable

C) $215,000 favorable

D) $215,000 unfavorable

PLEASE SPECIFY WHY THEY ARE UNFAVORABLE AND FAVORABLE

Explanation / Answer

1 Actual units 180000 Budgeted units 185000 Sale Per unit $21 Static budget Variance of Revenues = (Actual units x sale per unit) - (Budgeted units x Sales per unit) = (180000 x 21) - (185000 x 21) =      (105,000) Unfavorable Option B is Correct In this Problem, Actual units is lesser than Budgeted units. Thus, it may lead to Unfavorable variance to the company 2 Actual Variable Costs $1,080,000 Budgeted Variable Costs $1,295,000 Static budget Variance of Variable Costs = Actual Variable costs - Budgeted Variable Costs = $215,000 Favorable Option C is Correct In this Problem, Actual Variable Cost is lesser than Budgeted Variable Costs. hence, it may lead to favorable variance to the company 1 Actual units 180000 Budgeted units 185000 Sale Per unit $21 Static budget Variance of Revenues = (Actual units x sale per unit) - (Budgeted units x Sales per unit) = (180000 x 21) - (185000 x 21) =      (105,000) Unfavorable Option B is Correct In this Problem, Actual units is lesser than Budgeted units. Thus, it may lead to Unfavorable variance to the company 2 Actual Variable Costs $1,080,000 Budgeted Variable Costs $1,295,000 Static budget Variance of Variable Costs = Actual Variable costs - Budgeted Variable Costs = $215,000 Favorable Option C is Correct In this Problem, Actual Variable Cost is lesser than Budgeted Variable Costs. hence, it may lead to favorable variance to the company

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.