Based on the static budget for Barton Robotics, budgeted costs for producing 10,000 units are $1,100,000. When 12,000 units are actually produced, what is the total unfavorable difference shown on the static budget report?
Explanation
This question demonstrates the limitation of a static budget. When actual production (12,000 units) exceeds budgeted production (10,000 units), variable costs will naturally be higher, leading to a large unfavorable variance that is misleading for performance evaluation.
Other questions
What is the primary mechanism used for budgetary control in a company?
A static budget is a projection of budget data at what level of activity?
For which of the following costs is a static budget report most appropriate for performance evaluation?
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The master budget for Fox Company's Finishing Department shows annual fixed costs of $360,000 for depreciation, supervision, and property taxes. What is the monthly budgeted fixed cost for this department?
What is the core principle of responsibility accounting?
Which of the following describes a cost center?
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What is the primary objective of a responsibility reporting system?
A manager of an investment center can improve ROI by which of the following actions?
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What is the first step in developing a flexible budget?
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What type of responsibility center is the jewelry department of a Macy's department store?