Question

Bear Creek Golf Center reported actual operating income for the current year as $66,000. The flexible budget operating income for actual volume is $59,000​, while the static budget operating income is $60,000. What is the flexible budget variance for operating​ income?

Answer 1

$7,000 favorable variance

Step-by-step explanation:

The flexible budget operating income was $59,000 and the actual operating income for the year was $66,000, so the variance between them is $7,000 (= $66,000 - $59,000).

That means that either the total net income was higher than expected or the total costs were lower than expected.