The manager at Jerome Mobility, Inc. reported the following information for 2017:

Actual Results Static Budget
Units sold 1,700 units 1,500 units
Revenues $221,000 $195,000
Variable costs Direct materials 70,000 60,000
Direct manufacturing labor 36,500 31,500
Variable manufacturing overhead 16,000 13,500
Total variable costs 122,500 105,000
Contribution margin 98,500 90,000
Fixed costs 51,000 50,000
Operating income $47,500 $40,000

What is the static-budget variance for operating income for Jerome Mobility Inc. for 2017?

The static-budget variance for operating income for Jerome Mobility Inc for 2017 is $7,500 F

Solution & Explanation:

Static difference in net profits

= Actual result - Static budget amount

= $47,500 - $40,000

= $7,500 F

The static budget is related to the amount of development expected at the beginning of the financial year. The master budget is the static budget, since it is around a single (absolute) projected production level which is established for the time.

F implies the real expense is smaller than the estimated costs for product products.

The single-budget distinction is the difference in the single budget between the real effects and the resulting estimate.

An adverse deviation -denoted U— has the impact of decreasing operational profit relative to the expected sum as interpreted separately. For certain countries, including the UK, negative variances are often referred to as adverse variances.

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