Question

The following information is available for the Gabriel Products Company for the month of July:

  Static Budget     Actual

Units 5,000                          5,100

Sales revenue $60,000                       $58,650

Variable manufacturing costs $15,000                       $16,320

Fixed manufacturing costs $18,000                       $17,000

Variable marketing and administrative expense $10,000 $10,500

Fixed marketing and administrative expense $12,000                       $11,000

The total static-budget variance for operating income for the month of July would be

Answer 1

Static budget Variance for Operating income = $5,670 unfavorvable
Workings:
	Static Budget	Actual	Variance
unit	5000	5100
Sales	$60,000	$58,650	-$1,350
Less:
Variable Manufacturing Costs	$15,000	$16,320	-$1,320
Variable Marketing and administrative Cost	$10,000	$15,000	-$5,000
Total Variable Cost	$25,000	$31,320	-$6,320
Contribution Margin	$35,000	$27,330	-$7,670
Less:
Fixed Manufacturing Costs	$18,000	$17,000	$1,000
Fixed Mareting and Administrative Cost	$12,000	$11,000	$1,000
Total Fixed Cost	$30,000	$28,000	$2,000
Operating Income	$5,000	-$670	-$5,670