The Following Data Are for the Month of January for the Sterling

question 53

Essay

The following data are for the month of January for the Sterling Company:
Static budget data:
Sales of 9,000 pairs at $90 per pair
Variable costs of $69 per pair
Total fixed costs $108,000
Actual results:
Sales of 9,600 pairs at $87 per pair
Variable costs of $72 per pair
Total fixed costs $109,200
Required:
A)What is the static budget operating income?
B)What is the sales activity variance for operating income?
C)What is the flexible budget variance for operating income?

• A)What is the static budget operating income?
• B)What is the sales activity variance for operating income?
• C)What is the flexible budget variance for operating income?

---

Definitions:

Straight-Line Method

A method of calculating depreciation by evenly allocating the cost of an asset over its useful life.

Effective Interest Method

A technique used in accounting to allocate the interest expense or income of a financial instrument over its lifespan in a way that results in a constant rate on the carrying amount.

Bonds Payable

Long-term liabilities representing a company's commitment to pay a specified amount of money at certain future dates for funds borrowed.

Interest Expense

The expense an entity faces for using borrowed capital, recorded as a non-operating cost on the income statement.