The cellular phone division of Stegall Company had budgeted sales of $950,000 and actual sales of $900,000.Budgeted expenses were $600,000 while actual expenses were $550,000.Based on this information,the responsibility report for the manager of this profit center would show:
A) A favorable revenue variance.
B) A favorable cost variance.
C) Both a favorable revenue variance and a favorable cost variance.
D) None of these.

Question

Quizplus · Accepted Answer

Revenue variance = Actual sales - Budgeted sales
Revenue variance = $900,000 - $950,000 = $50,000 unfavorable (since actual sales were less than budgeted sales)
Cost variance = Actual costs - Budgeted costs
Cost variance = $550,000 - $600,000 -= $50,000 favorable (since actual costs were less than budgeted costs)

The Cellular Phone Division of Stegall Company Had Budgeted Sales