F8 F9 6 1-20) The static budget, at the beginning of the month, for Redwyne Comp

Question

F8 F9 6 1-20) The static budget, at the beginning of the month, for Redwyne Company follows Static budget: Sales volume: 2,000 units; Sales price: $50.00 per unit Variable costs: $13.00 per unit; Fixed costs: $25,200 per month Operating income: $48,800 Actual results, at the end of the month, follows: Actual results Sales volume: 1,800 units;Sales price: $58.00 per unit Variable costs: $16.00 per unit; Fixed costs: $33,600 per month Operating income: $42,000 Calculate the flexible budget variance for variable costs. A) $28,800 U B) $600 U C) $5,400 U D) $23,400 F

Explanation / Answer

Answer:-Flexible budget variance for variable costs= $5400 Unfavourable

Explanation:-

Flexible budget variance for variable costs:-

Standard cost of variable costs – Actual cost of variable costs

=$23400 - $28800

=$5400

Where:-

Standard cost of variable costs=Actual sale units*Budgeted variable cost per unit

                =1800 units*$13 per unit =$23400

Actual cost of variable costs=Actual sale units*actual variable cost per unit

                =1800 units*$16 per unit =$28800

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