Spark Company's Static Budget Is Based on a Planned Activity

question 57

Multiple Choice

Spark Company's static budget is based on a planned activity level of 45,000 units.At the same time the static budget was prepared,the management accountant prepared two additional budgets,one based on 40,000 units and one based on 50,000.The company actually produced and sold 49,000 units.In evaluating its performance,management should compare the company's actual revenues and costs to which of the following budgets?

• A) A budget based on 40,000 units
• B) A budget based on 45,000 units
• C) A budget based on 49,000 units
• D) A budget based on 50,000 units

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Definitions:

Chronologically

In the sequence of time, where events or records are arranged in the order of their occurrence.

Journal Entry

A journal entry is a record in accounting that logs all the financial transactions of a business, capturing their effects on the accounts.

Journal

A record where all financial transactions are initially documented in chronological order.

Normal Account Balances

The typical balance side (debit or credit) of an account based on its accounting function.