Onyx Company Has Prepared a Static Budget at the Beginning

question 41

Multiple Choice

Onyx Company has prepared a static budget at the beginning of the month. At the end of the month, the following information has been retrieved from the records. Static budget:
Sales volume: 2,000 units: Price: $50 per unit
Variable expense: $12 per unit: Fixed expenses: $25,000 per month
Operating income: $51,000
Actual results:
Sales volume: 1,800 units: Price: $58 per unit
Variable expense: $16 per unit: Fixed expenses: $35,000 per month
Operating income: $40,600
Calculate the sales volume variance for variable expenses.

• A)$2,970 U
• B)$2,400 F
• C)$3,800 U
• D)$3,960 F

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Definitions:

Par Value

A nominal value assigned to shares of stock by the issuing company, which has little relation to its market value.

Undervalued

A financial assessment that concludes an asset or a company's market price is lower than its intrinsic value.

Overvalued

Refers to a situation where the price of an asset exceeds its intrinsic value, often due to speculative demand.

Consolidated Equipment

Consolidated Equipment collectively refers to the physical assets reported on a consolidated financial statement, encompassing all subsidiaries and the parent company.