Flexible budget. The Virtual Candy Company sells sweets in bulk over the Internet. Virtual Candy’s budgeted operating income for the year ended December 31, 2007, was $3,780,000.

As a result of continued explosive growth on the Internet, actual operating income totalled

$7,867,200.

Required 1. Calculate the total static-budget variances.

2. Flexible-budget operating income was $8,316,000. Calculate the total flexible-budget and total sales-volume variance.

3. Comment on the total flexible-budget variance in the light of Virtual Candy’s explosive growth.