Question

RTI company’s master budget calls for production and sale of 18,000 units for $81,000; variable costs...

RTI company’s master budget calls for production and sale of 18,000 units for $81,000; variable costs of $30,600; and fixed costs of $20,000. During the most recent period, the company incurred $32,000 of variable costs and $28,000 of fixed costs to produce and sell 20,000 units for $85,000.

What is the sales volume variance for operating income?

Group of answer choices

$3,400 favorable

$64,000 unfavorable

$5,600 favorable

$9,000 unfavorable

What is the flexible budget variance for operating income?

Group of answer choices

$2,000 favorable

$11,000 unfavorable

$64,000 unfavorable

$6,000 favorable

Business   Accounting   
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Answer #1
Actual Results Flexible Budget Static/master Budget
Units Sold 20000 20000 18000
Revenue (Sales) 85000 90000 81000
Variable Costs 32000 34000 30600
Contribution Margin 53000 56000 50400
Fixed Costs 28000 20000 20000
Operating Income (Loss) 25000 36000 30400
Sales Volume Variance = Flexible Budget Operating Income - Static Budget Operating Income
=(36000-30400) 5600 Favorable
Flexible Budget Variance = Actual Operting Income - Flexible Budget Operating Income
=(25000-36000) -11000 Unfavorable
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