Zany Brainy projected current year sales of 50,000 units at a unit sale price of $20.00. Actual current year sales were 55,000 units at $22.00 per unit. Variable costs were budgeted at $14.00 per unit and actually totaled $15.00 per unit. Budgeted fixed costs totaled $400,000, while actual fixed costs amounted to $420,000.
-What is the Zany Brainy's flexible budget variance for variable expenses?

Question

Quizplus · Accepted Answer

Flexible budget variance for variable expenses = (actual units sold × actual variable expense per unit) - (budgeted units sold × budgeted variable expense per unit)
= (55,000 × 15) - (50,000 × 14)
= $825,000 - $700,000
= $125,000 unfavorable.

Therefore, the answer is C, $55,000 unfavorable, as it is the only option that represents an unfavorable variance.

Zany Brainy Projected Current Year Sales of 50,000 Units at a Unit