Question

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.
Actual Budgeted
Units sold 280,000 units 275,000 units
Variable costs $900,000 $885,000
Fixed costs $55,000 $52,000
15) What is the static-budget variance of revenues?

A) $55,000 favorable

B) $220,000 favorable

C) $220,000 unfavorable

D) $55,000 unfavorable

16) What is the static-budget variance of variable costs?

A) $12,000 favorable

B) $12,000 unfavorable

C) $15,000 favorable

D) $15,000 unfavorable

17) What is the static-budget variance for operating income?

A) $238,000 favorable

B) $238,000 unfavorable

C) $235,000 favorable

D) $235,000 unfavorable

Answer 1

The static-budget variance of revenues is $220,000 unfavorable.

The static-budget variance of variable costs is $15,000 unfavorable.

The static-budget variance for operating income is $238,000 unfavorable.

Explanation:

• The static budget is supposed to be a fixed and unchanged value for a period of time, regardless of the changes which ma affect the outcome process.

• While using a static budget, a company or organization are able to access where the money is being spent, how much revenue is earned or debited, and help to achieve and track its financial goals.
• A static budget is a budget that does not change with the changes in certain activity levels.
• The static budget can be used as a medium where actual results are compared.
•  The resulting variance  is called as a static budget variance.
• A static budget, is used by managers as to target for expenses, revenue and costs while others use it as to  forecast the number of a company.