Analyzing Profit Variances: Static vs. Flexible Budget

When the volume forecast error is accounted for, the business made money.

The static budget profit variance of -$200,000 indicates that the business earned $200,000 less than originally planned. However, the flexible budget profit variance of +$200,000 shows that, considering the actual sales volume, the business exceeded its expected profit by $200,000.

This means that the positive flexible budget variance offset the negative static budget variance, resulting in an overall profit for the business.

Therefore, the most correct statement is: 'When the volume forecast error is accounted for, the business made money.'