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

question 170

Multiple Choice

The static budget,at the beginning of the month,for Redwyne Company follows: Static budget:
Sales volume: 2,000 units; Sales price: $50.00 per unit
Variable costs: $13.00 per unit; Fixed costs: $25,200 per month
Operating income: $48,800
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 1,800 units; Sales price: $58.00 per unit
Variable costs: $16.00 per unit; Fixed costs: $33,600 per month
Operating income: $42,000
Calculate the flexible budget variance for variable costs.

• A) $28,800 U
• B) $600 U
• C) $5,400 U
• D) $23,400 F

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Definitions:

Book Value

The net value of a company's assets, less its liabilities and intangible assets, as recorded on the balance sheet.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace, which fluctuates based on supply and demand dynamics.

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its net assets, reflecting reputation, brand, etc.

Incremental Value

The additional value created by a specific action or decision, compared to what would have occurred without it.