Answer the following questions using the information below:
Coroid Corporation used the following data to evaluate their current operating system. The company sells items for $11 each and had used a budgeted selling price of $12 per unit.
$$\begin{array} { l r r }
& \underline { \text { Actual } } & \text { Budgeted } \
\text { Units sold } & 280,000 \text { units } & 275,000 \text { units } \
\text { Variable costs } & \$ 900,000 & \$ 885,000 \
\text { Fixed costs } & \$ 55,000 & \$ 52,000
\end{array}$$
-What is the static-budget variance of operating income?
A) $238,000 favorable
B) $238,000 unfavorable
C) $235,000 favorable
D) $235,000 unfavorable

Question

Answer the following questions using the information below:
Coroid Corporation used the following data to evaluate their current operating system. The company sells items for $11 each and had used a budgeted selling price of $12 per unit.
 $$\begin{array} { l r r } 
 & \underline { \text { Actual } } & \text { Budgeted } \
\text { Units sold } & 280,000 \text { units } & 275,000 \text { units } \
\text { Variable costs } & \$ 900,000 & \$ 885,000 \
\text { Fixed costs } & \$ 55,000 & \$ 52,000
\end{array}$$
-What is the static-budget variance of operating income?
A) $238,000 favorable
B) $238,000 unfavorable
C) $235,000 favorable
D) $235,000 unfavorable

Quizplus · Accepted Answer

The static-budget variance of operating income is calculated by comparing the actual operating income to the budgeted operating income. The budgeted operating income is calculated as (Budgeted selling price * Budgeted units sold) - Budgeted variable costs - Budgeted fixed costs = ($12 * 275,000) - $885,000 - $52,000 = $3,348,000. The actual operating income is (Actual selling price * Actual units sold) - Actual variable costs - Actual fixed costs = ($11 * 280,000) - $900,000 - $55,000 = $2,125,000. The variance is $2,125,000 - $3,348,000 = -$1,223,000, which is unfavorable. However, the choices provided seem to be incorrect based on this calculation, indicating a possible error in the question or choices.

Answer the Following Questions Using the Information Below: Coroid Corporation

Answer the Following Questions Using the Information Below:
Coroid Corporation