Explain the cardinal rules of variance analysis

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Reference no: EM131763103

Question: Strauss table Company manufactures table for schools. The 2005 operating budget is based on sales of 20,000 tables at a selling price of $100/ table. Budgeted variable costs are $64/table, while fixed costs total $600,000. Therefore, operating income is anticipated to be $120,000.

Actual sales for the period were 21,000 tables at a selling price of $104 each. Actual variable cost were $70 /table and fixed costs totalled $670,000.

1. Prepare a variance analysis for Strauss table company. Disaggregate variances to the maximum extent possible, with the given information, and label all variances. (you can create your variance analysis in portrait or in landscape format, whichever you find more convenient.)

2. When you disaggregate the overall income variance (a.k.a. the static-bubget variance) down into a sales-volume variance and a flexible-budget variance, which of the "Cardinal rules" of variance analysis is illustrated by that disaggretion?

Reference no: EM131763103

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