Bonita Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 800 kits was prepared for the year. Fixed operating expenses account for 32% of total operating expenses at this level of sales.

Sales		$	40,000
Cost of goods sold (all variable)			24,000
Gross margin			16,000
Operating expenses			14,000
Operating income		$	2,000

Flexible Budget

Sales Volume Variance

Static Budget

Unit Sales

Sales Revenue

Cost of Goods Sold