Reiger Company had planned for operating income of $10 million in the master budget but actually achieved operating income of only $7 million.
a. The static-budget variance for operating income is $3 million favorable.
b. The static-budget variance for operating income is $3 million unfavorable.
c. The flexible-budget variance for operating income is $3 million favorable.
d. The flexible-budget variance for operating income is $3 million unfavorable.
Answer: b. The static-budget variance for operating income is $3 million unfavorable.
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Select the description which most closely fits the term ORDER POINT
A) the time it takes to replenish an item in inventory B) extra inventory of an item carried to protect against variations in demand during lead time C) a listing of components required to manufacture a product D) the time when an order should be placed E) none of the above
Which of the following is true about net income?
A) Income targets are expressed in terms of operating income. B) Income targets are expressed in terms of net income. C) Income targets are not expressed in terms of net income. D) Managers always ignore the effect of net income on income taxes. E) Decisions do not result in large operating incomes and never have favorable tax consequences.