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:

Financial Leases

Typically, a longer-term, fully amortized lease under which the lessee is responsible for upkeep. Usually not cancellable without penalty.

CCA Depreciation

CCA Depreciation, or Capital Cost Allowance Depreciation, refers to a method of calculating depreciation for tax purposes in Canada, allowing businesses to deduct the cost of certain assets over time.

Lease Equipment

The process of renting machinery, vehicles, or other equipment for business use instead of purchasing them outright.

Lease-Purchase Analysis

Lease-Purchase Analysis is a financial evaluation to determine whether leasing or purchasing an asset is more cost-effective in the long term.