The Actual Information Pertains to the Third Quarter

question 132

Multiple Choice

The actual information pertains to the third quarter. As part of the budgeting process, the controller for Foley Manufacturing had developed the following static budget for the third quarter. The company is in the process of preparing the flexible budget and understanding the results.

The primary reason for high actual operating profits was ________.

• A) the variable-cost variance
• B) increased fixed costs
• C) flexible budget variance for revenues
• D) lower sales volume than planned

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Definitions:

Opportunity Costs

The benefits a person or business foregoes by choosing one alternative over another.

Idle Capacity

Unused production capability within a manufacturing plant or business operation, often due to lack of demand or inefficiency.

Drop a Product

The decision by a company to cease the production and sale of a particular product.

Rent

A periodic payment made to use a property or piece of equipment owned by another party.