Question 1

The Carolina Products Company has just completed a flexible budget analysis of 2S1U1P1ndS1S1P0 quarter operating income, as shown here:

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Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

Accepted Answer

Flexible budget variance for sales revenue is typically due to changes in price per unit, as it compares actual revenue to what revenue would have been at actual sales volume but expected prices.

Question 2

Onyx Company prepared a static budget at the beginning of the month. It's the end of the month and the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
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Based on the above data, how much was the flexible budget variance for sales revenue?

Accepted Answer

D) Calculations:
 11ea7fd0_411a_c55d_a768_4de4d45551de_TB2654_00

Question 3

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
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Based on the above data, how much was the flexible budget variance for operating income?

Accepted Answer

D) Calculations:
 11ea7fd0_411b_61a0_a768_f57a3cc8f26a_TB2654_00

Question 4

The Carolina Products Company has just completed a flexible budget analysis of 2S1U1P1ndS1S1P0 quarter operating income, as shown here:

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Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

Accepted Answer

The sales volume variance measures the difference between the actual sales volume and the expected sales volume. The analysis shows that the flexible budget expected sales of $1,125,000, and the actual sales were $1,250,000, indicating an increase in sales volume. Therefore, the correct interpretation is an increase in sales volume. The other options are not supported by the data provided.

Question 5

The Carolina Products Company has just completed a flexible budget analysis of 2S1U1P1ndS1S1P0 quarter operating income, as shown here:

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Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Accepted Answer

The flexible budget variance for fixed expenses is the difference between the actual fixed expenses and the budgeted fixed expenses. In this case, actual fixed expenses are $225,000 and budgeted fixed expenses are $200,000, so the variance is $25,000 unfavorable. This means that actual fixed expenses were higher than budgeted fixed expenses, which could be due to an increase in fixed costs.

Question 6

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
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Based on the above data, how much was the flexible budget variance for variable expenses?

Accepted Answer

B) Calculations:
 11ea7fd0_411b_137e_a768_8b2b4946da35_TB2654_00

Question 7

Which of the following BEST describes sales volume variance?

Accepted Answer

Sales volume variance is the difference between the flexible budget and static budget due to differences in volumes. It measures the impact of changes in sales volume on the budgeted amount. A change in sales volume may have a direct impact on variable costs like raw material and direct labor, but it will not affect fixed costs like rent or depreciation. Therefore, the sales volume variance occurs due to the change in the amount of variable costs.

Question 8

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
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Based on the above data, how much was the sales volume variance for revenues?

Accepted Answer

B) Calculations:
 11ea7fd0_411b_88b1_a768_8b62676ba2e9_TB2654_00

Question 9

The sales volume variance is the difference between the static budget and the flexible budget amounts, and is caused by actual sales volume being different than budgeted sales volume.

Accepted Answer

This statement accurately defines the sales volume variance.

Question 10

The Carolina Products Company has just completed a flexible budget analysis of 2S1U1P1ndS1S1P0 quarter operating income, as shown here:

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Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?

Accepted Answer

The sales volume variance for variable expenses is calculated by comparing the budgeted variable expenses for the actual sales volume to the flexible budget variable expenses for the actual sales volume. The flexible budget assumes an increase in variable expenses with an increase in sales volume. Therefore, if the actual variable expenses are higher than the flexible budget variable expenses, it is likely due to an increase in sales volume. Thus, the correct interpretation of the sales volume variance for variable expenses would be an increase in sales volume.

Question 11

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual variable expenses per unit were lower than projected in the static budget. What kind of variance would that produce?

Accepted Answer

A lower actual variable expense per unit than projected in the static budget would result in a favorable flexible budget variance for variable expenses. This is because the flexible budget adjusts to changes in volume and input prices, and therefore reflects a more accurate measure of what costs should have been for the level of activity achieved. A favorable variance means the actual costs were lower than what would have been expected based on the flexible budget.

Question 12

Which of the following BEST describes flexible budget variance?

Accepted Answer

Flexible budget variance is the difference between actual amounts and the flexible budget amounts, primarily due to differences in price and costs, not volumes. This variance helps in analyzing how well the costs were controlled.

Question 13

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual selling price was higher than projected in the static budget. What kind of variance would that produce?

Accepted Answer

The actual selling price being higher than projected in the static budget means that the company has generated more revenue per unit sold. This is a favorable situation in terms of sales revenues, as the company is earning more than anticipated. Therefore, it would produce a favorable flexible budget variance for sales revenues.

Question 14

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual fixed expenses were lower than projected in the static budget. What kind of variance would that produce?

Accepted Answer

A lower actual fixed expense than projected in the static budget would result in a favorable flexible budget variance for fixed expenses. This is because the flexible budget adjusts for changes in actual activity levels, whereas the static budget assumes a fixed level of activity. Therefore, if the actual expenses are lower than projected in the static budget, the flexible budget will show a favorable variance because it will have adjusted for the lower activity level.

Question 15

Portobello Company prepared the following static budget for the coming month:
 $\begin{array}{|l|l|r|}
\hline \text { Static Budget } & & \
\hline \text { Units/volume } & & 5,000 \
\hline & \text { Per Unit } & \
\hline \text { Sales revenue } & \$ 3.00 & \$ 15,000 \
\hline \text { Variable expenses } & \$ 1.80 & 9,000 \
\hline \text { Contribution margin } & & 6,000 \
\hline \text { Fixed expenses } & & 5,000 \
\hline \text { Operating income/(1oss) } & & \$ 1,000 \
\hline
\end{array}$ 
Using the format below, please prepare a flexible budget including data at volumes of 4,000 and 6,000 units.
 $\begin{array}{|l|l|r|r|r|}
\hline \text { Flexible Budget } & & & \
\hline \text { Units/volume } & & 4,000 & 5,000 & 6,000 \
\hline & \text { Per Unit } \
\hline \text { Sales revenue } & \$ 3.00 \
\hline \text { Variable expenses } & \$ 1.80 \
\hline \text { Contribution margin } & \
\hline \text { rixed expenses } & \
\hline \text { Operating income/(loss) } &\
\hline
\end{array}$

Accepted Answer

The answer of Portobello Company prepared the following static budget...

Question 16

The Carolina Products Company has just completed a flexible budget analysis of 2S1U1P1ndS1S1P0 quarter operating income, as shown here:

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Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for operating income?

Accepted Answer

The sales volume variance for operating income is the difference between the actual operating income and the flexible budget operating income, and is caused by a difference in sales volume from the budgeted sales volume. In this case, the actual operating income of $225,000 is higher than the flexible budget operating income of $200,000, indicating that sales volume was higher than expected. Therefore, the correct interpretation of the sales volume variance is an increase in sales volume. A decrease in price per unit, increase in variable cost per unit, or increase in fixed costs would not be related to the sales volume variance.

Question 17

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
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Based on the above data, how much was the sales volume variance for variable expenses?

Accepted Answer

B) Calculations:
 11ea7fd0_411b_d6d2_a768_533cb4257393_TB2654_00

Question 18

The Carolina Products Company has just completed a flexible budget analysis of 2S1U1P1ndS1S1P0 quarter operating income, as shown here:

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Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?

Accepted Answer

The flexible budget variance for variable expenses is calculated by subtracting the flexible budget amount from the actual amount spent on variable expenses. In this case, the flexible budget for variable expenses was $357,120 and the actual amount spent was $365,400, resulting in a variance of $8,280 (actual amount - flexible budget amount = variance). Since the variance is positive, it means that the actual variable expenses were higher than the flexible budgeted amount. The only choice that explains this increase in variable expenses is choice B, which states an increase in variable cost per unit. This means that the variable costs for producing the units increased beyond what was originally budgeted, leading to a higher overall expense.

Question 19

Ibis Company prepared the following static budget for the coming month:
 $$\begin{array} { | l | l | r | } 
\hline \text { Static Budpgt } & & \
\hline \text { Units/volume } & & 12,000 \
\hline & \text { Per Unit } & \
\hline \text { Sales revenue } & \$ 20.00 & \$ 240,000 \
\hline \text { Variable expenses } & \$ 9.00 & 108,000 \
\hline \text { Contribution margin } & & 132,000 \
\hline \text { Fixed Expenses } & & 130,000 \
\hline \text { Operating income(loss) } & & \$ 2,000 \
\hline
\end{array}$$ 
Using the format below, please prepare a flexible budget including data at volumes of 13,000 and 14,000 units.
 $\begin{array}{|l|l|l|l|l|}
\hline \text { Flexible Budget } & & & & \
\hline & & 12,000 & 13,000 & 14,000 \
\hline & \text { Per Unit } & & & \
\hline \text { Snits/volume } & \$ 20.00 & & & \
\hline \text { Sariable expenses } & \$ 9.00 & & & \
\hline \text { Contribution margin } & & & & \
\hline \text { Fixed expenses } & & & & \
\hline \text { Operating income/(1oss) } & & & & \
\hline
\end{array}$

Accepted Answer

The answer of Ibis Company prepared the following static budget...

Question 20

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
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Based on the above data, how much was the flexible budget variance for fixed expenses?

Accepted Answer

B) Calculations:
 11ea7fd0_411b_3a8f_a768_2110de3f3e2f_TB2654_00

Quiz 23: Flexible Budgets and Standard Costs

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Which of the following BEST describes sales volume variance?

The sales volume variance is the difference between the static budget and the flexible budget amounts, and is caused by actual sales volume being different than budgeted sales volume.

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual variable expenses per unit were lower than projected in the static budget. What kind of variance would that produce?

Which of the following BEST describes flexible budget variance?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual selling price was higher than projected in the static budget. What kind of variance would that produce?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual fixed expenses were lower than projected in the static budget. What kind of variance would that produce?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for operating income?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?

Quiz 23: Flexible Budgets and Standard Costs

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

Which of the following BEST describes sales volume variance?

The sales volume variance is the difference between the static budget and the flexible budget amounts, and is caused by actual sales volume being different than budgeted sales volume.

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual variable expenses per unit were lower than projected in the static budget. What kind of variance would that produce?

Which of the following BEST describes flexible budget variance?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual selling price was higher than projected in the static budget. What kind of variance would that produce?

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual fixed expenses were lower than projected in the static budget. What kind of variance would that produce?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for operating income?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for sales revenues?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for variable expenses?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the sales volume variance for operating income?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for variable expenses?