In analyzing company operations, the controller of the Jason Corporation found a $250,000 favorable flexible budget...

In analyzing company operations, the controller of the Jason Corporation found a $250,000 favorable flexible budget revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance can be wholly explained by

Select one:

a. the total flexible budget variance

b. the total static budget variance

c. changes in unit selling prices

d. changes in the number of units sold

Solutions

Expert Solution

> Concept

The flexible budget variance is calculated by comparing the results generated by a flexible budget and actual results. A flexible budget is a budget that adjusts or flexes with changes in volume or activity.

> Explanation

a. the total flexible budget variance - It is incorrect since revenue variance is part of total variance.

b. the total static budget variance - It is incorrect since static budget variance is different from flexible budget variance

c. changes in unit selling prices - It is correct choice because the flexible budget revenue variance is difference between budgeted revenue and actual revenue at same level of activity. Thus, number of units is same in both flexble budget and actual results, the difference is due to unit price.

d. changes in the number of units sold - It is incorrect choice because the flexible budget revenue variance is difference between budgeted revenue and actual revenue at same level of activity. Thus, number of units is same in both flexble budget and actual results, the difference is not due to number of units.

Hope you understand the solution.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 400,000 units of the standard model and 140,000 units of the deluxe model during the coming year. The standard model requires 0.10 direct labor hour per unit, and the deluxe model requires 0.16. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 140,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 400,000 units of the standard model and 110,000 units of the deluxe model during the coming year. The standard model requires 0.10 direct labor hour per unit, and the deluxe model requires 0.16. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 130,000 units of the deluxe model during the coming year. The standard model requires 0.10 direct labor hour per unit, and the deluxe model requires 0.16. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a...

Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 400,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas...

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the...

Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Second Quarter $220,000 110,000 110,000 22,000 $ 88,000 Third Fourth Quarter $190,000 95,000 95,000 19,000 S 76,000 Quarter Quarter $280,000 140,000 140,000 28,000 Total $920,000 460,000 460,000 92,000 Sales revenue Cost of goods sold Gross profit Selling administrative expenses $230,000 115,000 115,000 23,000 $ 92,000 Net income $112,000 $368,000 Historically, cost of...

Subjects