Answer:
Actual Budgeted
Units sold 991,000 1,000,000
Variable costs 1,280,000 1,500,000
Fixed costs 955,000 905,000
<u>Actual Results</u> <u>Flexible Budget</u> <u>Static Budget
</u>
Units sold 991,000 991,000 1,000,000
Revenues $9,910,000 $9,910,000 $10,000,000
Variable costs -$1,280,000 -$1,486,500 -$1,500,000
Contr. margin $8,630,000 $8,423,500 $8,500,000
Fixed costs -$955,000 -$905,000 -$905,000
Operating income $7,675,000 $7,518,500 $7,595,000
The static budget only considers standard revenue (units sold and price) and costs (both variable and fixed). While a flexible budget will be calculated using standard costs but with actual units sold and produced. Both static and flexible budgets use the same fixed costs, only variable costs and revenues differ.
