The static budget,at the beginning of the month,for Redwyne Company follows: Static budget:
Sales volume: 2,000 units; Sales price: $\$ 50.00$ per unit
Variable costs: $\$ 14.00$ per unit; Fixed costs: $\$ 25,000$ per month
Operating income: $\$ 47,000$

Actual results, at the end of the month, follows:
Actual results:
Sales volume: 1,900 units; Sales price: $\$ 58.50$ per unit
Variable costs: $\$ 16.00$ per unit; Fixed costs: $\$ 33,000$ per month
Operating income: $\$ 47,750$
Calculate the flexible budget variance for variable costs.
A)$30,400 U
B)$4,350 U
C)$3,800 U
D)$26,600 F

Question

The static budget,at the beginning of the month,for Redwyne Company follows: Static budget:
Sales volume: 2,000 units; Sales price: $\$ 50.00$ per unit 
Variable costs: $\$ 14.00$ per unit; Fixed costs: $\$ 25,000$ per month 
Operating income: $\$ 47,000$

Actual results, at the end of the month, follows:
Actual results:
Sales volume: 1,900 units; Sales price: $\$ 58.50$ per unit 
Variable costs: $\$ 16.00$ per unit; Fixed costs: $\$ 33,000$ per month 
Operating income: $\$ 47,750$
Calculate the flexible budget variance for variable costs.
A)$30,400 U
B)$4,350 U
C)$3,800 U
D)$26,600 F

Quizplus · Accepted Answer

The flexible budget variance for variable costs is calculated by comparing the actual variable costs to the flexible budget variable costs. The flexible budget variable costs for 1,900 units at $14 per unit is $26,600. The actual variable costs are 1,900 units at $16 per unit, which is $30,400. The variance is $30,400 - $26,600 = $3,800 unfavorable (U).

The Static Budget,at the Beginning of the Month,for Redwyne Company $50.00\$ 50.00$50.00

The Static Budget,at the Beginning of the Month,for Redwyne Company $\$ 50.00$