Taylor Products Inc. has an $5,000 unfavorable flexible budget variance for October. Which of the following statements is true, if October's flexible budget net operating income was $175,000?
A) Taylor's static budget must have showed a net operating income of $180,000.
B) Taylor's static budget must have showed a net operating income of $170,000.
C) Taylor's actual net operating income must have been $180,000.
D) Taylor's actual net operating income must have been $170,000.

Question

Quizplus · Accepted Answer

The unfavorable variance indicates that the actual net operating income was $5,000 less than the flexible budget, so it must have been $170,000.