Gilbert Watches sells a line of wrist wear. Gilbert\'s performance report for Ma
ID: 2408602 • Letter: G
Question
Gilbert Watches sells a line of wrist wear. Gilbert's performance report for March
follows:
Actual
Static Budget
Watches sold
500
600
Sales
$24,000
$30,000
Variable cost
$14 ,500
$18,000
Contribution margin
$9,500
$12,000
Fixed cost
$8,100
$8,800
If Gilbert Watches uses a flexible budget to analyze its performance, the variable cost flexible budget variance for March is
$500 unfavorable
$500 favorable
$3,500 unfavorable
$3,500 favorable
The fixed cost variance for March is ?
$700 unfavorable
$700 favorable
$2,500 favorable
$300 unfavorable
please explain your answer. Thank you.
Actual
Static Budget
Watches sold
500
600
Sales
$24,000
$30,000
Variable cost
$14 ,500
$18,000
Contribution margin
$9,500
$12,000
Fixed cost
$8,100
$8,800
Explanation / Answer
Variable cost variance
Standard variable cost per unit
18000/600 = 30 per unit
Standard variable cost for actual output 500 units
500 units *30 = 15000
Actual variable cost = 14500
Variable cost variance = standard cost - actual cost
15000-14500 =
Answer is 500 Favourable
Fixed cost variance
Standard cost - Actual cost
8800 - 8100
Answer is: 700 Favourable
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