Taylor Products Inc.has an $8000 unfavourable flexible budget variance for October.If October's flexible budget net income was $175 000,which of the following statements is true?
A) Taylor's static budget must have showed net income of $183 000.
B) Taylor's static budget must have showed net income of $167 000.
C) Taylor's actual net income must have been $183 000.
D) Taylor's actual net income must have been $167 000.

Question

Quizplus · Accepted Answer

An unfavorable variance means the actual results were worse than budgeted. Since the flexible budget variance is $8,000 unfavorable, subtract this from the flexible budget net income of $175,000 to find the actual net income, which is $167,000.