Critique a Variance Report [LO6]

Refer to the data for The Exterminator Inc. in Exercise 9–6 . A management intern has suggested that the budgeted revenues and costs should be adjusted for the actual level of activity in May before they are compared to the actual revenues and costs. Because the actual level of activity was 4% higher than budgeted, the intern suggested that all budgeted revenues and costs should be adjusted upward by 4%. A report comparing the budgeted revenues and costs, with this adjustment, to the actual revenues and costs appears below:

Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during May? Why or why not?

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The Exterminator Inc. Variance Report For the Month Ended May 31 Adjusted Actual Planning Budget Results Variances Jobs 208 208 Revenue. $38,480 $36,400 $2,080 U Expenses: Mobile team operating costs... 17,576 17,060 516 F Exterminating supplies.. 4,160 4,350 190 U Advertising. 936 1,040 104 U Dispatching costs 2,808 2,340 468 F Office rent 2,392 2,300 92 F Insurance Total expense 3,744 3,600 144 F 31,616 30,690 926 F Net operating income.. $ 6,864 $ 5,710 $1,154 U