The management accountant prepares the following performance report for a company's first year of operations:
$\begin{array}{llll}&\text { Budget }& \text { Actual } & \text { Variance }\
\text { Sales } & \$ 100,000 & \$ 110,000 & ? \
\text { Cost of Goods Sold } & 50,000 & 45,000 & ? \
\text { Selling Expenses } & 20,000 & 19,000 & ? \
\text { Administrative Expenses } & 10,000 & 11,000 & ? \
\text { Operating Income } & \$ 20,000 & \$ 35,000 & ?
\end{array}$
Required:
Compute variances for each line item on the income statement. Also indicate if the variances are favorable or unfavorable.

Question

The management accountant prepares the following performance report for a company's first year of operations:
 $\begin{array}{llll}&\text { Budget }& \text { Actual } & \text { Variance }\
\text { Sales } & \$ 100,000 & \$ 110,000 & ? \
\text { Cost of Goods Sold } & 50,000 & 45,000 & ? \
\text { Selling Expenses } & 20,000 & 19,000 & ? \
\text { Administrative Expenses } & 10,000 & 11,000 & ? \
\text { Operating Income } & \$ 20,000 & \$ 35,000 & ?
\end{array}$ 
Required: 
 Compute variances for each line item on the income statement. Also indicate if the variances are favorable or unfavorable.

Quizplus · Accepted Answer

The Answer of The management accountant prepares the following performance report for a company's first year of operations:
 $\begin{array}{llll}&\text { Budget }& \text { Actual } & \text { Variance }\
\text { Sales } & \$ 100,000 & \$ 110,000 & ? \
\text { Cost of Goods Sold } & 50,000 & 45,000 & ? \
\text { Selling Expenses } & 20,000 & 19,000 & ? \
\text { Administrative Expenses } & 10,000 & 11,000 & ? \
\text { Operating Income } & \$ 20,000 & \$ 35,000 & ?
\end{array}$ 
Required: 
 Compute variances for each line item on the income statement. Also indicate if the variances are favorable or unfavorable.

The Management Accountant Prepares the Following Performance Report for a Company's