Question - Building off of last week's material, we are introduced to the topic of flexible budgets.
How does a flexible budget differentiate from a static budget?
Under what circumstances would you have an unfavorable direct material price variance. Please be specific so as to demonstrate your thorough understanding. Consider providing an example.
Given a static budget of 9,000 units where total revenues are $27,000 and variable expenses are $13,500 and fixed expenses are $3,000, your operating income is approximately $10,500. If we wanted to FLEX this budget for total units sold of 7,900 units, what would be your new operating income/(loss) figure? Be sure to show your work! (This question is worth 3 points and you will have one attempt to answer it correctly).