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Budgeted Actual Variance Revenue $ 100,000 $ 200,000 $ 100,000 COGS (20,000) (20,000) 0 GS&A (15,000)...

Budgeted Actual Variance Revenue $ 100,000 $ 200,000 $ 100,000 COGS (20,000) (20,000) 0 GS&A (15,000) (15,000) 0 Net income $65,000 $ 195,000 $ 100,000 Which line item on the income statement needs to be investigated? A. Revenue B. COGS C. GS&A D. None of the above

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Answer #1

Answer is option (A). Revenue

Explanation;

As per information of the question, it is clear that COGS and GS&A are same in budgeted and actual result. But net income shows difference of $100000 which is due to difference in revenue figures.

So, revenue needs to be investigated.

As per budgeted data revenue is $100000 whereas actual revenue is $200000 but COGS and GS&A do not change as per change in revenue hence this is a question of doubt bout revenue hence revenue need to be investigated.

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