The flexible budget variance is the difference between expected results in the flexible budget for the actual units sold and the static budget.

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Part 1

True

False

The static budget, at the beginning of the month, for Vintage Wine Company follows:

Static budget: Sales volume:2,000units; Sales price:$50per unit

Variable costs:$13per unit; Fixed costs:$25,300per month

Operating income: $48,700

Actual results, at the end of the month, follows:

Actual results:Sales volume:1,900units; Sales price:$59.00per unit

Variable costs:$17.00per unit; Fixed costs:$34,100per month

Operating income: $45,700

Calculate the flexible budget variance for variable costs.

3/

The static budget, at the beginning of the month, for Wadsworth Company follows:

Static budget:

Sales volume:2,000units; Sales price:$50per unit

Variable costs:$14per unit; Fixed costs:$25,100per month

Operating income: $46,900

Actual results, at the end of the month, follows:

Actual results:

Sales volume:1,900units; Sales price:$59per unit

Variable costs:$16.00

per unit; Fixed costs:$33,000per month

Operating income: $48,700

Calculate the flexible budget variance for operating income.