Question

Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $12 each and used a budgeted selling price of $12 per unit. Actual Budgeted Units sold 48,000 units 34,000 units Variable costs $170,000 $156,000 Fixed costs $42,000 $57,000 What is the static−budget variance of operating​ income?

Answer 1

Answer:

Static−budget variance of operating​ income is $169,000F

Explanation:

                                    Actual         Budgetet      

Sales                          $576,000     $408,000      $168,000  

Variable cost             $170,000      $156,000       $14,000  

Contribution margin  $406,000    $252,000       $154,000  

Less: Fixed cost         $42,000       $57,000         -$15,000

Net Income / (Loss)    $364,000  $195,000        $169,000 Favourable

Workings

Sales: Actual 48,000 units * $12=  576,000

           Budgeted 34,000 units * $12= 408,000