Fo 6 1-20) The static budget, at the beginning of the month, for Redwyne Company

Question

Fo 6 1-20) 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: $13.00 per unit; Fixed costs: $25,200 per month Operating income: $48,800 Actual results, at the end of the month, follows: Actual results: Sales volume: 1,800 units; Sales price: $58.00 per unit Variable costs: $16.00 per unit; Fixed costs: $33,600 per month Operating income: $42,000 Calculate the flexible budget variance for variable costs. A) $28,800 U B) $600 U C) $5,400 U D) $23,400 F

Explanation / Answer

Calculate flexible budget variance :

Flexible budget variance = Flexible budget cost-actual cost

= (1800*13)-(1800*16)

Flexible budget variance = 5400 U

so answer is c) $5400 U

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