Use the Information Below to Answer the Following Question(s)

question 26

Multiple Choice

Use the information below to answer the following question(s) .
Ames Golf Company used the following data to evaluate their current operating system. The company sells 1 pack of golf balls for $10 per pack. The $10 selling price is also the budgeted selling price.

-A company uses a static budget approach and the previous management accountant calculated the following information: Fixed costs variance $10,000 U; revenues variance $400,000 F; contribution margin variance $60,000 F Required: What is the total static-budget variance?

• A) $50,000 F
• B) $50,000 U
• C) $230,000 F
• D) $230,000 U
• E) $390,000 F

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Definitions:

Nominal Rate

The interest rate before adjustments for inflation, as opposed to the real rate, which is adjusted for inflation.

Rate of Inflation

The percent change in the price level of goods and services in an economy over a period of time, usually measured annually.

Interest

Interest is the charge for borrowing money typically expressed as an annual percentage rate, or the income earned from lending money.

Consumption

Families or individuals partaking in the use of goods and services.