The Static Budget,at the Beginning of the Month,for Divine Décor

question 118

Multiple Choice

The static budget,at the beginning of the month,for Divine Décor Company,follows: Static budget:
Sales volume: 1500 units; Sales price: $70.00 per unit
Variable costs: $32.00 per unit; Fixed costs: $38,000 per month
Operating income: $19,000
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 990 units; Sales price: $75.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $33,000 per month
Operating income: $6600
Calculate the flexible budget variance for sales revenue.

• A) $6980 U
• B) $6980 F
• C) $4950 U
• D) $4950 F

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Definitions:

Debt Financing

The method of raising capital through the sale of bonds, bills, or notes to individuals or institutional investors which must be repaid at a later date.

Equity Financing

The process of raising capital through the sale of shares in a company.

Term

The time until a debt security’s principal is due to be repaid. Also called the debt’s maturity or time until maturity.

Indirect Transfers

Transactions where assets or money move between entities or locations via intermediaries rather than through a direct exchange.