Answer the following questions using the information below:
Caan Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit.

-What is the static-budget variance of revenues?
A)$60,000 favorable
B)$60,000 unfavorable
C)$6,000 favorable
D)$6,000 unfavorable

Question

Answer the following questions using the information below:
Caan Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit.
 
-What is the static-budget variance of revenues?
A)$60,000 favorable 
B)$60,000 unfavorable 
C)$6,000 favorable 
D)$6,000 unfavorable

Quizplus · Accepted Answer

To calculate the static-budget variance of revenues, we can use the formula: 
Static-budget variance = (actual units sold x budgeted selling price) - (budgeted units sold x budgeted selling price)
In this case, actual units sold were 3,000 and budgeted units sold were 4,000. 
So, the variance = (3,000 x $20) - (4,000 x $20) = -$20,000 
Since the variance is negative, it means the actual revenues were lower than the budgeted revenues, leading to a $20,000 unfavorable variance. Therefore, the best choice is B.

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