This is same question

QUESTION 6

1. The following information is given for Ace Company:

   	Actual Amount	Flexible Budget	Original Budget
   Units	9,000	9,000	10,000
   Sales revenue	$72,000	$63,000 ($7 per unit)	$70,000 ($7 per unit)
   Variable costs	$38,000	$36,000 ($4 per unit)	$40,000 ($4 per unit)
   Fixed costs	$14,000	$15,000	$15,000
   Total costs	$52,000	$51,000	$55,000
   Profit	$20,000	$12,000	$15,000

   Which of the following is not true?

   	A.	Given the actual units produced and sold, Ace made $8,000 more profit than it should have.
   	B.	Activity variance of costs is $1,000, Unfavorable.
   	C.	Activity variance of revenue is $7,000, Unfavorable
   	D.	Profit variance is $8,000, Favorable.

Use the information given in the above question. Which of the following is an incorrect way of explaining the $5,000 difference between originally budgeted profit ($15,000) and actual profit ($20,000)?

	A.	Net effects of [Revenue variance, Costs variance, Activity variance of revenue, Activity variance of costs] are $5,000, Favorable.
	B.	Given that smaller units were made and sold than originally planned, Ace's profit target was $3,000 smaller than the original budget. But actual profit was $8,000 greater than that target.
	C.	Given that actual number of units was 10% smaller than its original plan, the actual profit was 10% smaller than the original plan.
	D.	Net effects of [Profit variance, Activity variance of profit] are $5,000, Favorable.