98. CSO: 1B1e LOS: 1B1t
The following information is from the accounting records of St. Charles Enterprises.
Static
Budget Actual
Sales volume (units) 82,000 75,000
Selling price/unit $ 15.00 $ 15.00
Variable cost/unit 9.00 9.25
Fixed cost 280,000 285,000
A staff assistant performed a comparison of budget and actual data, and calculated an
unfavorable operating income variance of $65,750. The assistant concluded that
performance did not meet expectations because there was an unfavorable variance in
operating income. Which one of the following is the best evaluation of this preliminary
conclusion?
a. Both the conclusion and the variance calculation are correct.
b. The conclusion is incorrect, but the variance calculation is informative.
c. The conclusion is correct, but the variance calculation could be more informative.
d. Both the conclusion and the variance calculation are incorrect.
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