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 operating profit?
A)$175 000 favourable
B)$325 000 unfavourable
C)$195 000 unfavourable
D)$225 000 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 operating profit?
A)$175 000 favourable
B)$325 000 unfavourable
C)$195 000 unfavourable
D)$225 000 favourable

Quizplus · Accepted Answer

Static-budget variance of operating profit = (Budgeted operating profit - Actual operating profit)= (Budgeted sales - Budgeted variable costs - Budgeted fixed costs) - (Actual sales - Actual variable costs - Actual fixed costs)= ($10 * 500000 - $1500000 - $900000) - ($10 * 495000 - $1250000 - $925000)= ($5000000 - $2400000) - ($4950000 - $2175000)= $2600000 - $2775000= -$175000 (unfavourable)

Answer the Following Questions Using the Information Below: Barossa Valley

Answer the Following Questions Using the Information Below:
Barossa Valley