Albers Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 7,600 units, but its actual level of activity was 7,570 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:

Data used in budgeting:
Actual results for April:
-The activity variance for net operating income in April would be closest to:
A)$372 U
B)$13,998 U
C)$13,998 F
D)$372 F

Question

Albers Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 7,600 units, but its actual level of activity was 7,570 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:

Data used in budgeting:

Actual results for April:

-The activity variance for net operating income in April would be closest to:

Data used in budgeting:
  Actual results for April: 
-The activity variance for net operating income in April would be closest to:
A)$372 U 
B)$13,998 U 
C)$13,998 F 
D)$372 F

Quizplus · Accepted Answer

The activity variance for net operating income is calculated based on the difference between the flexible budget and the static budget. A variance of $372 U (unfavorable) indicates that the actual activity level resulted in a net operating income that was $372 less than expected.

Albers Corporation Manufactures and Sells a Single Product