Sweet Sadie Company is a manufacturer of gourmet dog treats. It currently manufactures 3 different product...

Transcribed Image Text:

Sweet Sadie Company is a manufacturer of gourmet dog treats. It currently manufactures 3 different product lines. The manager of each product line is held responsible for generating revenue and controlling costs. The following information was compiled for the Sweet Potato Bliss product line for the prior period: Sales Revenue Variable Manufacturing Costs Fixed Manufacturing Costs Variable Operating Costs Fixed Operating Costs Actual Results Master Budget 9,000 units 8,000 units $20,000 $12,000 $6,250 $2,000 $4,350 $5,000 $1,000 $1,600 $500 $500 Assume variances are separately calculated for each line listed above. Which of the following statements is incorrect? A. If the company's materiality threshold is $900, three of the flexible budget variances should be investigated. B. The master budget variance for fixed costs is equal to the flexible budget variance for fixed costs. C. The product line is considered a profit center. D. The total fixed costs on the flexible budget equals $5,500. E. The revenue volume variance is favorable and the variable cost volume variance is unfavorable. Sweet Sadie Company is a manufacturer of gourmet dog treats. It currently manufactures 3 different product lines. The manager of each product line is held responsible for generating revenue and controlling costs. The following information was compiled for the Sweet Potato Bliss product line for the prior period: Sales Revenue Variable Manufacturing Costs Fixed Manufacturing Costs Variable Operating Costs Fixed Operating Costs Actual Results Master Budget 9,000 units 8,000 units $20,000 $12,000 $6,250 $2,000 $4,350 $5,000 $1,000 $1,600 $500 $500 Assume variances are separately calculated for each line listed above. Which of the following statements is incorrect? A. If the company's materiality threshold is $900, three of the flexible budget variances should be investigated. B. The master budget variance for fixed costs is equal to the flexible budget variance for fixed costs. C. The product line is considered a profit center. D. The total fixed costs on the flexible budget equals $5,500. E. The revenue volume variance is favorable and the variable cost volume variance is unfavorable.