During April,Gordon Company had actual sales of $160,000 compared to budgeted sales of $190,000.Actual cost of goods sold was $105,000,compared to a budget of $125,500.Monthly operating expenses,budgeted at $28,000,totaled $25,000.Interest revenue of $2,500 was earned during April but had not been included in the budget.The performance report for April would show a net income variance of:

Question

Quizplus · Accepted Answer

To calculate the net income variance, we need to subtract the actual cost of goods sold and operating expenses from the actual sales, and also add the interest revenue which was not budgeted:

Net Income Variance = Actual Sales - Actual Cost of Goods Sold - Actual Operating Expenses + Interest Revenue

Net Income Variance = $160,000 - $105,000 - $25,000 + $2,500

Net Income Variance = $32,500

Since the actual net income is lower than the budgeted net income, the variance is unfavorable. Therefore, the correct answer is C) ($4,000) Unfavorable.

During April,Gordon Company Had Actual Sales of $160,000 Compared to Budgeted