Question

Eagle Company used the following data to evaluate its current operating system. - sells items for $24 each - used a budgeted selling price of $24 per unit. Actual Budgeted Units sold 177,000 units 184,000 units Variable costs $1,090,000 $1,290,000 Fixed costs $804,000 $780,000 What is the static-budget variance of operating income

Answer 1

Answer:

$100,000 unfavorable

Explanation:

Given the above information,

Sales = Selling price per unit × unit sold

Actual sales = $24 × 177,000 units = $4,248,000

Budgeted sales = $24 × 184,000 units = $4,416,000

Operating income = Actual sales - Variable income - Fixed income

Actual operating income = $4,248,000 - $1,090,000 - $804,000 = $2,354,000

Budgeted operating income = $4,416,000 - $1,290,000 - $780,000 = $2,364,000

Therefore,

Static budget variance of operating income = Actual operating income - Budgeted operating income

= $2,354,000 - $2,364,000

= $100,000 unfavorable