The actual information pertains to the month of September.As part of the budgeting process,Kriger Fencing Company developed the following static budget for September.Kriger is in the process of preparing the flexible budget and understanding the results. $\begin{array}{lccc}
& \text { Actual } & \text { Flexible } & \text { Static } \
& \text { Results } & \text { Budget } & \text { Budget } \
\text { Sales volume (in units) } & 10,000 & & 12,500\
\text { Sales revenues } & \$ 500,000 & \$ & \$ 625,000 \
\text { Variable costs } & 256,000 & \$ & 300,000\
\text { Contribution margin }& 244,000& \$ &325,000\
\text { Fixed costs } & 229,000 & \$ & 225,000\
\text { Operating profit } & \$ 15,000& \$& \$ 100,000
\end{array}$ The primary reason for low operating profits was ________.

Question

The actual information pertains to the month of September.As part of the budgeting process,Kriger Fencing Company developed the following static budget for September.Kriger is in the process of preparing the flexible budget and understanding the results. $\begin{array}{lccc} 
& \text { Actual } & \text { Flexible } & \text { Static } \
& \text { Results } & \text { Budget } & \text { Budget } \
\text { Sales volume (in units) } & 10,000 & & 12,500\
\text { Sales revenues } & \$ 500,000 & \$ & \$ 625,000 \
\text { Variable costs } & 256,000 & \$ & 300,000\
\text { Contribution margin }& 244,000& \$ &325,000\
\text { Fixed costs } & 229,000 & \$ & 225,000\
\text { Operating profit } & \$ 15,000& \$& \$ 100,000
\end{array}$ The primary reason for low operating profits was ________.

Quizplus · Accepted Answer

The primary reason for the low operating profits is the lower sales volume than planned, as the actual sales volume was 10,000 units compared to the static budget of 12,500 units. This decrease in sales volume directly impacts sales revenue and contribution margin, leading to lower operating profits.

The Actual Information Pertains to the Month of September The Primary Reason for Low Operating Profits Was ________