Answer the following questions using the information below:
Barossa Valley Wines used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r }
& \text { Actual } & \text { Budgeted } \
\text { Units sold } & 495000 \text { units } & 500000 \text { units } \
\text { Variable costs } & \$ 1250000 & \$ 1500000 \
\text { Fixed costs } & \$ 925000 & \$ 900000
\end{array}$$
-What is the static-budget variance of revenues?
A)$50 000 favourable
B)$50 000 unfavourable
C)$5000 unfavourable
D)$5000 favourable

Question

Answer the following questions using the information below:
Barossa Valley Wines used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Units sold } & 495000 \text { units } & 500000 \text { units } \
\text { Variable costs } & \$ 1250000 & \$ 1500000 \
\text { Fixed costs } & \$ 925000 & \$ 900000
\end{array}$$
-What is the static-budget variance of revenues?
A)$50 000 favourable
B)$50 000 unfavourable
C)$5000 unfavourable
D)$5000 favourable

Quizplus · Accepted Answer

The static-budget variance of revenues is calculated as the difference between the actual revenues and the budgeted revenues. The budgeted revenue is 500,000 units * $10 = $5,000,000. The actual revenue is 495,000 units * $10 = $4,950,000. The variance is $4,950,000 - $5,000,000 = -$50,000, which is unfavourable because the actual revenue is less than the budgeted revenue.

Answer the Following Questions Using the Information Below: Barossa Valley

Answer the Following Questions Using the Information Below:
Barossa Valley