Chapter 7 1) Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $19 each and used a budgeted selling price of S19 per unit Budgeted 39,000 units $152,000 s50,000 Actual 48,000 units $167,000 $41,000 Units sold Variable costs Fixed costs What is the static-budget variance of revenues? A) $171,000 favorable B) $171,000 unfavorable C) 86,000 favorable D) $9,000 unfavorable

A) $171,000 favorable

Explanation:

Static Budget variance is calculated by simply taking difference of budgeted values and actual values.

                  Static budget Variance report of Lincoln Corporation

                             Budgeted      Actual     Variance    Status

Units sold               39,000        48,000       9000       Favorable

Revenue (@$19)   $741,000    $912,000   $171,000   Favorable

Variable costs      $152,000    $167,000   $15,000     Unfavorable

Fixed costs           $50,000     $41,000     $9,000      Favorable

As Sales is increased by 9000 units and $171,000, the increase in sale is a favourable varince. So, correct option is A) $171,000 favorable.

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