The following data are for Sandy Corporation:
$\begin{array} { l }
&&&\text { Flexible Budget for}\
&\text { Actual }&\text { Static Budget }&\text { Actual Sales activity }\
\text { Units }&18,000&16,000&18,000\
\text { Sales }&\$360,000&\$320,000&\$360,000\
\text {Variable costs }&234,000&192,000&216,000\
\text { Contribution margin }&\$126,000&\$128,000&\$144,000\
\text { Fixed costs }&76,000&80,000&80,000\
\text { Operating income }&\$50,000&\$48,000&\$64,000
\end{array}$

The static budget variance for operating income is ________.
A) $2,000 Favorable
B) $2,000 Unfavorable
C) $16,000 Favorable
D) $16,000 Unfavorable

Question

The following data are for Sandy Corporation:
$\begin{array} { l  }
&&&\text { Flexible Budget for}\
&\text { Actual }&\text { Static Budget }&\text { Actual Sales activity }\
\text { Units }&18,000&16,000&18,000\
\text { Sales }&\$360,000&\$320,000&\$360,000\
 \text {Variable costs }&234,000&192,000&216,000\
\text { Contribution margin }&\$126,000&\$128,000&\$144,000\
\text { Fixed costs }&76,000&80,000&80,000\
\text { Operating income }&\$50,000&\$48,000&\$64,000
\end{array}$

The static budget variance for operating income is ________.
A) $2,000 Favorable
B) $2,000 Unfavorable
C) $16,000 Favorable
D) $16,000 Unfavorable

Quizplus · Accepted Answer

The static budget variance for operating income is $2,000 unfavorable. The static budget is based on a sales level of 16,000 units, while the actual sales level was 18,000 units. The static budget operating income is $48,000, while the actual operating income is $50,000. The difference between the actual operating income and the static budget operating income is $2,000 unfavorable.

The Following Data Are for Sandy Corporation The Static Budget Variance for Operating Income Is ________