Answer the following questions using the information below:
Lander Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit.
$$\begin{array} { l r r } &\text { Actual } &\text { Budgeted }\

\text { Units sold }& 41,000 \text { units } & 40,000 \text { units } \
\text { Variable costs } & \$ 164,000 & \$ 156,000 \
\text { Fixed costs }&\$ 46,000 & \$ 48,000
\end{array}$$
-What is the static-budget variance of operating income?
A) $10,000 favorable
B) $10,000 unfavorable
C) $12,000 favorable
D) $12,000 unfavorable

Question

Answer the following questions using the information below:
Lander Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit.
 $$\begin{array} { l r r } &\text { Actual } &\text { Budgeted }\

\text { Units sold }& 41,000 \text { units } & 40,000 \text { units } \
\text { Variable costs }  & \$ 164,000 & \$ 156,000 \
\text { Fixed costs }&\$ 46,000 & \$ 48,000
\end{array}$$
-What is the static-budget variance of operating income?
A) $10,000 favorable
B) $10,000 unfavorable
C) $12,000 favorable
D) $12,000 unfavorable

Quizplus · Accepted Answer

The static-budget variance of operating income is calculated by comparing the actual operating income to the budgeted operating income. The actual sales revenue is $738,000 (41,000 units x $18), and the budgeted sales revenue is $720,000 (40,000 units x $18). The actual total costs are $210,000 ($164,000 variable + $46,000 fixed), and the budgeted total costs are $204,000 ($156,000 variable + $48,000 fixed). The actual operating income is $528,000 ($738,000 - $210,000), and the budgeted operating income is $516,000 ($720,000 - $204,000). The variance is $12,000 favorable ($528,000 - $516,000).

Answer the Following Questions Using the Information Below: Lander Corporation

Answer the Following Questions Using the Information Below:
Lander Corporation