Onyx Company Prepared a Static Budget at the Beginning of the Month

question 164

Multiple Choice

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the flexible budget variance for variable expenses?

• A)$5,490 U
• B)$2,970 U
• C)$2,970 F
• D)$3,960 F

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Definitions:

Equity Method

A method of accounting employed by companies to evaluate the earnings from their investments in other firms.

Subsidiary

A company controlled by another company, often referred to as the parent company.

Fair Value

The likely receipts from offloading an asset or the expenditure to relocate a liability, in a systematic transaction at the market rate on the day of valuation.

Initial Value Method

An accounting method where investments are recorded at their acquisition cost without subsequent change except for impairments and certain adjustments.