Sunday, June 5, 2011

2. What is the static-budget variance of variable costs?

ACCOUNTING

Multiple Choice

Bates Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit.


Actual Budgeted

Units sold 495,000 units 500,000 units

Variable costs $1,250,000 $1,500,000

Fixed costs $ 925,000 $ 900,000



What is the static-budget variance of variable costs?

a. $200,000 favorable

b. $50,000 unfavorable

c. $250,000 favorable

d. $250,000 unfavorable

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