2. (10 pts) The following data are for the month of January for the Soloway Comp

Question

2. (10 pts) The following data are for the month of January for the Soloway Company. Assume the cost driver is the number of units sold. Static budget data: Sales of 9,000 pairs at $90 per pair Variable costs of $69 per pair Total fixed costs $108,000 Actual results: Sales of 9,600 pairs at $87 per pair Variable costs of $72 per pair Total fixed costs $109,200 A) What is the static budget operating income? B) What is the sales activity variance for operating income? C) What is the flexible budget variance for operating income?

Explanation / Answer

$835,200

(9600×$87)

$864,000

(9600×$90)

$810,000

(9000×$90)

$691,200

(9600×$72)

$662,400

(9600×69

$621,000

(9000×69)

  

A=$81,000

B=$12,600 F

C=$58,800 U

Actual budget. flexible budget variance flexible budget. .    sales activity variance static budget.    Sales

$835,200

(9600×$87)

$864,000

(9600×$90)

$810,000

(9000×$90)

Variable costs

$691,200

(9600×$72)

$662,400

(9600×69

$621,000

(9000×69)

Fixed costs $109,200 $108,000 $108,000 Operating income $34,800 $58,800 U $93,600 $12,600 F $81,000

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