Schoening Corporation Is a Shipping Container Refurbishment Company That Measures

question 265

Multiple Choice

Schoening Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for January. When the company prepared its planning budget at the beginning of January, it assumed that 40 containers would have been refurbished. However, 38 containers were actually refurbished during January.
The revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for January would have been closest to:

• A) $5,400 U
• B) $2,800 U
• C) $5,400 F
• D) $2,800 F

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Definitions:

Gross Income

The total income earned before any deductions or taxes are subtracted.

Back-end Ratio

A debt-to-income ratio that calculates the percentage of a person's gross income going toward paying all debt obligations, including mortgage and auto loans.

Expenses

Costs incurred or money spent on goods and services.

Escrow Account

An escrow account is a financial arrangement where funds or assets are held by a third party on behalf of two other parties in the process of completing a transaction.