Problema Solution
Simple budget: 1,200,000
Flexible budget: 1,000,000
Actual results: 500,000
1. What is the flexible profit variance?
2. What is the simple profit variance?
Answer provided by our tutors
flexible profit variance = actual results - flexible budget
flexible profit variance = 500,000 - 1,000,000 = -$500,000
simple profit variance = actual results - simple budget
simple profit variance = 500,000 - 1,200,000 = -$700,000