Question

Compute the variances in dollar amount and in percentage. (Round to the nearest whole percent.) Indicate whether the variance is favorable (F) or unfavorable (U). Budgeted Income Amount $500.00 Actual Amount $400.00 Dollar Variance $ Percent Variance % F or U

Answer 1

The dollar variance is -$100.

The percent variance is -20%.

Since the actual income is less than the budgeted income, the variance is unfavorable (U).

We calculate Dollar Variance as :
`Actual Amount - Budgeted Income`

`Dollar Variance = 400 - 500 = 100`

Next, we calculate percent variance as :

`Percent variance = (Dollar Variance)/(Budgeted Income) *100`

Plugging the values in we get,

`Percent Variance = (-100)/(500) *100`

Percent Variance = -20%