Corrao Company Had a Static Budgeted Operating Income of $8

question 31

Multiple Choice

Corrao Company had a static budgeted operating income of $8.6 million.Actual operating income was $6.4 million.The flexible budget operating income at the actual level of output is $7,000,000.What is the static-budget variance of operating income?

• A) $1.6 million Favorable
• B) $1.6 million Unfavorable
• C) $2.2 million Favorable
• D) $2.2 million Unfavorable

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security representing a claim on part of the company's assets and earnings.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividend payment preferences.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of stock rather than cash.

Corporation's Directors

Individuals elected by a corporation's shareholders to oversee the management and make major business decisions on behalf of the shareholders.