Potter Company Has the Following Information Assume the Cost Driver of Product Costs Is Units of loss

question 89

Multiple Choice

Potter Company has the following information:
$\begin{array}{ll}\text { Actual operating loss at 5,000 units } & \$(11,000) \\\text { Budgeted operating income at 5,000 units } & \$ 5,000 \\\text { Budgeted operating income at 10,000 units } & \$ 12,000 \\\text { Planned level of operations } & 10,000 \text { units } \\\text { Actual level of operations } & 5,000 \text { units }\end{array}$
Assume the cost driver of product costs is units of production.What is the flexible budget variance for operating income?

• A) $5,000 Unfavorable
• B) $11,000 Unfavorable
• C) $16,000 Unfavorable
• D) $16,000 Favorable

---

Definitions:

Unamortized Discount

The portion of a bond's face value that has not yet been expensed as interest over time to reflect the bond being issued below its par value.

Redeemed

The act of paying off or buying back something, such as repaying a bond or exchanging a coupon for goods.

Gain On Redemption

The financial benefit gained when a debt instrument, such as a bond, is redeemed before its maturity at a value higher than its book value.

Discount On Bonds Payable

The difference between the face value of bonds and their selling price when sold for less than their face value.