Onyx Décor Company Has Prepared a Static Budget at the Beginning

question 20

Multiple Choice

Onyx Décor Company has prepared a static budget at the beginning of the month.At the end of the month,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 flexible budget variance for operating income.

• A)$4,500 U
• B)$7,600 U
• C)$2,800 U
• D)$5,490 F

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Definitions:

Continuous Compounding

A mathematical approach where interest earnings are immediately reinvested to generate additional earnings continuously.

Stated Rate

The annual interest rate stated on a financial instrument, such as a loan or bond, not adjusting for compounding or fees.

Interest-Only Loan

A loan where the borrower is required to pay only the interest on the principal balance for a set period of time.

Annual Interest

Interest calculated over a 12-month period on the outstanding balance of a loan or deposit, usually compounded annually.