Static Budget Variance of Revenues for Lincoln Corporation

What is the static budget variance of revenues?

Based on the data provided, what is the static budget variance of revenues for Lincoln Corporation?

Answer:

The static budget variance of revenues is $36,000 Unfavorable.

Explanation:

Lincoln Corporation used the following data to evaluate their current operating system:

Actual Budgeted

Units sold: 42,000 units 39,000 units

Variable costs: $168,000 $158,000

Fixed costs: $46,000 $48,000

The Static Budget Variance is calculated by subtracting the budgeted amounts from the actual amounts. In a static budget, the actual amounts are not changed for different activity levels. Instead, the actual is compared with the budgeted so that the exact variance is obtained for an organization.

For revenues specifically, the static budget variance is calculated as follows:

- Actual revenues: $504,000

- Budgeted revenues: $468,000

- Static Budget Variance: $36,000 Unfavorable

It is important for companies like Lincoln Corporation to analyze these variances in order to understand the differences between actual and budgeted figures, and to make informed decisions for future operations.