Mountain Sports Equipment Company projected sales of 78,000 units at a unit sale price of $12 for the year 2015. Actual sales of 2015 were 75,000 units at $14 per unit. Variable costs were budgeted at $3 per unit; actual amount was $4 per unit. Budgeted fixed costs totaled $375,000, while actual fixed costs amounted to $400,000. What is the flexible budget variance for variable expenses?

Question

Quizplus · Accepted Answer

Flexible budget variance for variable expenses = (Actual quantity sold x Actual variable cost per unit) - (Budgeted quantity sold x Budgeted variable cost per unit)
Flexible budget variance for variable expenses = (75,000 x $4) - (78,000 x $3)
Flexible budget variance for variable expenses = $300,000 - $234,000
Flexible budget variance for variable expenses = $66,000 unfavorable

Therefore, the correct answer is B) $75,000 unfavorable.

Mountain Sports Equipment Company Projected Sales of 78,000 Units at a Unit