Answered: Dog In September, Numbers Incorporated…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 33P

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Dog

In September, Numbers Incorporated sold 45,000 units of its only product for $394,000, and incurred a total cost of $365,000, of which $39,000 was fixed costs. The flexible budget for September showed total sales of $440,000. Among variances of the period were: total variable cost flexible-budget variance, $7,500U; total flexible-budget variance, $76,000U; and, sales volume variance, in terms of contribution margin, $41,000U. The amount of operating income in the flexible budget (FB) for September was:

Definition Definition Measure used to estimate the difference between the budgeted and annual proportion for a specific accounting year. A favorable budget variance refers to positive variances or gains, while unfavorable or negative variances refer to a shortfall in the budget. A budget variance is indicative of the instances where the actual costs incurred are higher or lower than the estimated costs.

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