arry's Lawn Service provides lawn care in a planned community where all lawns are approximately the same size. At the end of May, Larry prepared his June budget based on mowing 500 lawns.Since all of the lawns are similar in size, Larry felt that the number of lawns mowed in a month would be the best way to measure overall activity for his business. Following are the details given of his actual results and planning budget for the month ending on June 30^th.

Requirements:

1.Calculate the spending and revenue variances

2.Identify the favorable and unfavorable spending and revenue variances

Larry's Lawn Service For the Month Ended June 30 Revenue/Cost Actual Planning Formulas Results Budget Number of lawns (Q) 550 500 Revenue ($75Q) $ 43,000 $ 37,500 Expenses: Wages and salaries ($5,000 + $30Q) $ 23,500 $ 20,000 Gasoline and supplies ($9Q) 5,100 4,500 Equipment maintenance ($3Q) 1,300 1,500 Office and shop utilities ($1,000) 950 1,000 Office and shop rent ($2,000) 2,000 2,000 Equipment Depreciation ($2,500) 2,500 2,500 Insurance ($1,000) 1,200 1,000 Total expenses 36,550 32,500 Net operating income $ 6,450 $ 5,000