1) Abernathy Corporation used the following data to evaluate their current operating

system. The company sells items for $10 each and used a budgeted selling price of
$10 per unit.

Actual Budgeted
Units sold 92,000 units 90,000 units
Variable costs $450,800 $432,000
Fixed costs $ 95,000 $100,000
a. What is the static-budget variance of revenues?
(92,000 units x $10) - (90,000 units x $10) = $20,000 F

b. What is the static-budget variance of variable costs?

$450,800 - $432,000 = $18,800 U

c. What is the static-budget variance of operating income?

Actual Budget Variance

Production in units 92,000 90,000

Revenues $920,000 $900,000 $20,000 F

Variable costs $450,800 $432,000 $18,800 U
CM $469,200 $468,000 $1,200 F

Fixed costs $95,000 $100,000 $5,000 F

Total costs $374,200 $368,000 $6,200 F

2) Bates Corporation used the following data to evaluate their current operating system.
The company sells items for $10 each and used a budgeted selling price of $10 per
unit.

Actual Budgeted
Units sold 495,000 units 500,000 units
Variable costs $1,250,000 $1,500,000
Fixed costs $ 925,000 $ 900,000
a. What is the static-budget variance of revenues?
(495,000 units x $10) - (500,000 units x $10) = $50,000 U

b. What is the static-budget variance of variable costs?

$1,250,000 - $1,500,000= $250,000 F

c. What is the static-budget variance of operating income?

Actual Static Static-budget
Results Budget Variance
Units sold 495,000 500,000
Revenues $4,950,000 $5,000,000 $(50,000) U
Variable costs 1,250,000 1,500,000 (250,000) F
Contribution margin $3,700,000 $3,500,000 $200,000 F
Fixed costs 925,000 900,000 25,000 U
 Operating income $2,775,000 $2,600,000 $175,000 F

Units sold 495,000 500,000

Revenues $4,950,000 $5,000,000 $(50,000) U

Variable costs $1,250,000 $1,500,000 $(250,000) F
CM $3,700,000 $3,500,000 $200,000 F

Fixed costs
Total costs