EXPERT ANSWER
Question 1 & Question 2. :Static-budget and actual operating income and and Static-budget variance for operating income
| Static-budget and actual operating income and Variance | |||||
| Static-budget | Actual-June | Variance | |||
| 1400 Units | Actual-static | ||||
| A | Sales(1,000 Cabinets x$150) | $150,000 | $212,800 | $62,800 | Favorable |
| Direct material (1,000 Cabinetsx$67.50) | $67,500 | $121,000 | $53,500 | Unfavorable | |
| Direct labour (1,000 Cabinetsx $30) | $30,000 | $34,000 | $4,000 | Unfavorable | |
| Other variable cost (1,000 Cabinetsx $15) | $15,000 | $15,000 | – | ||
| Fixed cost | $7,500 | $6,000 | -$1,500 | Favorable | |
| B | Total Cost | $120,000 | $176,000 | $56,000 | Unfavorable |
| C=A-B | Operating income | $30,000 | $36,800 | $6,800 | Favorable |
Question 3 , Question 4 & Question 5 Flexible-budget operating income Flexible-budget variance for operating income Sales-volume variance for operating income
| Static-budget and actual operating income and Varianle | |||||
| Flexible-budget | Actual-June | Variance | |||
| 1400 Units | Actual-Flexible | ||||
| A | Sales(1,400 Cabinets x$150) | $210,000 | $212,800 | $2,800 | Favorable |
| Direct material (1,400 Cabinetsx$67.50) | $94,500 | $121,000 | $26,500 | Unfavorable | |
| Direct labour (1,400 Cabinetsx $30) | $42,000 | $34,000 | -$8,000 | Favorable | |
| Other variable cost (1,400 Cabinetsx $15) | $21,000 | $15,000 | -$6,000 | Favorable | |
| Fixed cost | $7,500 | $6,000 | -$1,500 | Favorable | |
| B | Total Cost | $165,000 | $176,000 | $11,000 | Unfavorable |
| C=A-B | Operating income | $45,000 | $36,800 | -$8,200 | Unfavorable |
Sales Volume variance:
