The following profit information was taken from Eastside Hospital’s budget data: Static budget $1,200,000 &nbs
The following profit information was taken from Eastside
Hospital’s budget data:
Static budget $1,200,000
Flexible budget $1,000,000
Actual results $ 500,000
What is the profit variance? (Hint: An unfavorable variance is
identified by a minus sign.)
| -$200,000 |
| -$500,000 |
| -$700,000 |
| $500,000 |
| $700,000 |
Homework Answers
Solution :
The profit variance is calculated using the following formula :
= Actual results or profit - Static Profits
As per the information given in the question we have
Actual results or profit = $ 500,000
Static Profits = $ 1,200,000
Thus the profit variance = $ 500,000 - $ 1,200,000 = - $ 700,000
Thus there is an unfavorable profit variance = - $ 700,000 ( Option 3 )
Add Answer to:
The following profit information was taken from Eastside
Hospital’s budget data:
Static budget $1,200,000
&nbs
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