The following data was gathered for Anu-U, an electronic commercial hair dryer manufacturer:
Anu-U
Budgeted fixed costs for production between 0 and 500,000 units $500,000
Budgeted selling price $5,000 per unit
Budgeted production and sales 100 units
Actual production and sales 85 units
Required
Compute the static-budget variance and identify whether the variance is favorable, F, or unfavorable, U.
A) $75,000 U variance
B) $89,000 F variance
C) $64,000 U variance
D) $97,000 F variance
E) $58,000 U variance
A
Explanation: A) [(100 units × $5,000 = $500,000 ) - (85 units × $5,000 = $425,000 )] = $75,000 U Variance.
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