Potter Company has the following information:

Actual operating loss at 5,000 units$(11,000)

Budgeted operating income at 5,000 units$5,000

Budgeted operating income at 10,000 units$12,000

Planned level of operations10,000 units

Actual level of operations5,000 units

Assume the cost driver of product costs is units of production. What is the flexible budget variance for operating income?

A) $5,000 Unfavorable

B) $11,000 Unfavorable

C) $16,000 Unfavorable

D) $16,000 Favorable

12) Assume sales are the cost driver for product costs. The difference between the static budget amount for sales and the flexible budget amount for sales at the actual level of sales is called the ________. The difference between the flexible budget amount for sales at the actual level of sales and the actual amount for sales is called the ________.

A) static variance; flexible budget variance

B) master variance; flexible budget variance

C) quantity variance; static budget variance

D) sales activity variance; flexible budget variance

13) Differences between actual results and the static budget at the original planned level of output are ________ variances.

A) flexible budget

B) financial budget

C) operating budget

D) static budget

14) Flexible budget variances are the deviations of actual results from the ________.

A) flexible budget amounts for the achieved level of activity

B) flexible budget amounts for the static level of activity

C) static budget amounts for the expected level of activity

D) static budget amounts for last year's level of activity

15) The amount of actual operating income may differ from the static budget amount for operating income because ________.

A) actual output levels were not the same as in the static budget

B) actual variable costs were higher than expected variable costs

C) actual fixed costs were higher than expected fixed costs

D) all of the above

16) Which is NOT a reason for a static budget variance?

A) Actual sales volume was higher than projected sales volume.

B) Actual variable costs were higher than static budget variable costs.

C) Actual fixed costs were higher than static budget fixed costs.

D) Actual sales volume in current period was higher than projected sales volume in last period.

17) If sales are the cost driver, unfavorable flexible budget variances result from ________.

A) actual costs exceeding planned costs

B) planned costs exceeding actual costs

C) actual sales exceeding planned sales

D) planned sales exceeding actual sales

18) Flexible budget variances are the difference between the actual results and ________.

A) the static budget for the planned level of output

B) the flexible budget for the planned level of output

C) the flexible budget for the actual level of output

D) the master budget for the planned level of output

19) The following data are for Pablo Corporation:

Flexible Budget for

Actual     Static Budget    Actual Sales Activity

Units18,00016,00018,000

Sales$360,000$320,000$360,000

Variable costs234,000192,000216,000

Contribution margin$126,000$128,000$144,000

Fixed costs76,00080,00080,000

Operating income$50,000$48,000$64,000

The flexible budget variance for operating income is ________.

A) $2,000 Favorable

B) $2,000 Unfavorable

C) $14,000 Favorable

D) $14,000 Unfavorable

20) The following data are for California Closets:

Flexible Budget for

Actual     Static Budget    Actual Sales Activity

Units18,00016,00018,000

Sales$360,000$320,000$360,000

Variable costs234,000192,000216,000

Contribution margin$126,000$128,000$144,000

Fixed costs76,00080,00080,000

Operating income$50,000$48,000$64,000

The sales activity variance for operating income is ________.

A) $14,000 Favorable

B) $14,000 Unfavorable

C) $16,000 Favorable

Answer rating: 100% (QA)

11Answer C Explanation Actual operating loss budgeted operating income 11000 5000 16000 unfavorable 12Answer D Sales activity variance flexible budget ... View the full answer