Question
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
| Fixed Component per Month | Variable Component per Job | Actual Total for February | |||||||
| Revenue | $ | 276 | $ | 35,890 | |||||
| Technician wages | $ | 8,400 | $ | 8,250 | |||||
| Mobile lab operating expenses | $ | 4,900 | $ | 34 | $ | 9,500 | |||
| Office expenses | $ | 2,400 | $ | 3 | $ | 2,670 | |||
| Advertising expenses | $ | 1,580 | $ | 1,650 | |||||
| Insurance | $ | 2,890 | $ | 2,890 | |||||
| Miscellaneous expenses | $ | 930 | $ | 1 | $ | 375 | |||
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $34 per job, and the actual mobile lab operating expenses for February were $9,500. The company expected to work 140 jobs in February, but actually worked 148 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporations revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
| Fixed Component per Month | Variable Component per Job | Actual Total for February | |||||||
| Revenue | $ | 276 | $ | 35,890 | |||||
| Technician wages | $ | 8,400 | $ | 8,250 | |||||
| Mobile lab operating expenses | $ | 4,900 | $ | 34 | $ | 9,500 | |||
| Office expenses | $ | 2,400 | $ | 3 | $ | 2,670 | |||
| Advertising expenses | $ | 1,580 | $ | 1,650 | |||||
| Insurance | $ | 2,890 | $ | 2,890 | |||||
| Miscellaneous expenses | $ | 930 | $ | 1 | $ | 375 | |||
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $34 per job, and the actual mobile lab operating expenses for February were $9,500. The company expected to work 140 jobs in February, but actually worked 148 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporations revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
| Actual Results | ???Activity variances OR Revenue and spending variances | Flex budget | ???Activity variances OR Revenue and spending variances | Planning Budget | |||
| Jobs | 148 | ---- | ----- | ? | F/U | ||
| --- | --- | ? | |||||
| Revenue | 35890 | ? | F/U | ? | F/U | ||
| Expenses | --- | ? | |||||
| Technician Wages | 8250 | ? | F/U | ? | F/U | ||
| mobile lab operating expense | 9500 | ? | F/U | ? | F/U | ||
| office expense | 2670 | ? | F/U | ? | F/U | ||
| advertising expense | 1650 | ? | F/U | ? | F/U | ||
| insurance | 2890 | ? | F/U | ? | F/U | ||
| Misc expense | 375 | ? | F/U | ? | F/U | ||
| Total expense | 25335 | ? | F/U | ? | F/U | ||
| Net operating income | 10555 | ? | F/U | ? | F/U |
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Company Accounting
Authors: Ken Leo, John Hoggett, John Sweeting, Jennie Radford
8th Edition
0470819731, 978-0470819739
