1. “Managers should be rewarded for every favorable variance and blame for every unfavorable variance.” Do you agree?
2. Consider a company that plans to sell 1,000 units for $3 per unit. Budgeted variable costs are $2 per unit, budgeted fixed costs are $700 and static-budget profit is $300. Suppose the Company sells 800 units and income is $110. Compute and interpret the variance.