Dorffman Inc.has a $12 000 favourable flexible budget variance for May.If May's actual net income was $68 000,which of the following statements is true?
A) Dorffman's static budget must have showed net income of $56 000.
B) Dorffman's static budget must have showed net income of $80 000.
C) Dorffman's flexible budget must have showed net income of $56 000.
D) Dorffman's flexible budget must have showed net income of $80 000.

Question

Quizplus · Accepted Answer

A favorable flexible budget variance of $12,000 means the actual net income ($68,000) is $12,000 higher than the flexible budget net income, which must have been $56,000.