The following information was drawn from the accounting records of Smith Company

Question

The following information was drawn from the accounting records of Smith Company

Static
Budget

Flexible
Budget

Actual
Results

Based on this information the

Multiple Choice

variable operating cost volume variance is a $400 favorable variance.

variable operating cost flexible budget variance is a $200 unfavorable variance.

variable operating cost volume variance is a $200 favorable variance.

variable operating cost flexible budget variance is a $400 favorable variance.

Static
Budget

Flexible
Budget

Actual
Results

  Sales $ 10,000 $ 12,000 $ 12,700   Cost of Goods Sold (6,000) (7,200) (6,900)   Gross Margin 4,000 4,800 5,800   Variable Cost (2,000) (2,400) (2,600)   Fixed Cost (1,000) (1,000) (1,300)   Net Income $ 1,000 $ 1,400 $ 1,900

Explanation / Answer

Answer :

Variable operating cost flexible budget variance is a $200 unfavorable

Variable cost =2600-2400

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