The Static Budget,at the Beginning of the Month,for Amira Company

question 190

Multiple Choice

The static budget,at the beginning of the month,for Amira Company follows: Static budget:
Sales volume: 1000 units; Sales price: $70.00 per unit
Variable costs: $32.00 per unit; Fixed costs: $36,800 per month
Operating income: $1200
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 980 units; Sales price: $74.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $34,600 per month
Operating income: $3620
Calculate the flexible budget variance for fixed costs.

• A) $2200 U
• B) $2200 F
• C) $0
• D) $3180 F

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Definitions:

Exponents

Mathematical notation indicating the number of times a number (the base) is multiplied by itself.

Production Function

A model in economics that links physical output of a production process to physical inputs or factors of production.

Returns To Scale

An economic concept describing how the output of a production process changes as the scale of inputs is increased, divided into increasing, constant, or decreasing returns to scale.

Marginal Products

The additional output resulting from a one-unit increase in the use of a particular input, holding all other inputs constant.