7. Budget Variance Analysis

Hertzler Corporation uses customers served as its measure of activity. During November, the company budgeted for 23,000 customers, but actually served 25,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $7.25q Wages and salaries: $30,500 + $2.30q Supplies: $0.80q Insurance: $6,200 Miscellaneous: $8,750 + $0.30q The company reported the following actual results for November: Required: Prepare a net income report showing the company's revenue and spending variances for November. Label each variance as favorable (F) or unfavorable (U). Make sure it is formatted based on an income statement and show the actual and the budgeted side by side. (2 questions in 1 Create Budget, then Compare Budget with Actual results, which will allow to figure the amount of variance and if it is Favorable or Unfavorable)

Reverwe $ 185,000 Wages $ 95,000 Supplies $ 19,500 Insurance $ 6,500 Misc $ 15,000