Ceo, inc.’s budgeted data for march when 2,400 units were budgeted to be produced and sold are provided: controllable fixed costs $31,300 sales revenue $190,000 variable costs $105,840 actual profit in march totaled $47,000. how much is the variance in a month when 2,500 units are produced (assume sales revenue remains the same)?

$1,450 unfavorable

Explanation:

For computing the variance, first we have to compute the budgeted profit which is shown below:

The budgeted profit = Revenue - expenses

where,

Revenue is $190,000

And, the expenses = Variable cost + Fixed cost

The variable cost per unit is not given so first we have to calculate it

Variable cost per unit = $105,840 ÷ 2,400 units  = $44.10

Now for 2,500 units, the total cost would be

= ($44.10 × 2,500 units) + $31,300

= $141,550

Now the budgeted profit would be

= $190,000 - $141,550

= $48,450

And, the variance equal to

= Actual profit - budgeted profit

= $47,000 - $48,450

= $1,450 unfavorable

the correct answer is:

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