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Cannondale variable expense variance; sell to breakeven

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Suppose that the master budget for Cannondale shows total variable expenses of $10,000. The budget was based on production of 5,000 units. Cannondale sells all units it produces. Budgeted net income was $5,000. Actual production and sales was 4,500. What is the variable expense variance?

$5,000
$4,500
$500
$1,000

2. Cannondale makes a certain part that it sells for $10 each. The variable costs are $6 per part. The annual fixed costs are $2,000. How many of this part must Cannondale sell to breakeven?

a. 333
b. 200
c. 1,000
d. 500

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Solution Summary

The expert examines Cannondale variable expenses for variance. The sell to breakeven is examined.

Solution Preview

1. Variable expense per unit = $10,000 / 5,000 units = $2 per unit
Actual total variable expenses = (4,500 units)($2 ...

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