Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million, but actually achieved operating income of only $7 million and a contribution margin of $2.5 million. A. The staticminus−budget variance for operating income is $3 million favorable.
B. The staticminus−budget variance for operating income is $3 million unfavorable.
C. The flexibleminus−budget variance for operating income is $3 million unfavorable.
D. The flexibleminus−budget variance for operating income is $3 million favorable.

On december 31, 2013, coronado company issues 173,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. the fair value of the sars is estimated to be $5 per sar on december 31, 2014; $2 on december 31, 2015; $10 on december 31, 2016; and $8 on december 31, 2017. the service period is 4 years, and the exercise period is 7 years. prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.