Chapter 9 In-Class Exercise

ABC Corporation uses customers served (q) as its measure of activity. During February, the company budgeted for 35,000 customers and used the following revenue and cost formulas in its budgeting:

Revenue: $3.50q

Wages and salaries: $33,200 + $1.10q

Supplies: $0.50q

Insurance: $10,400

Miscellaneous expense: $6,400 + $0.30q

Actual Results for February

Customers served 34,000

Revenue. $119,800

Expenses:

Wages and salaries. 68,000

Supplies 14,400

Insurance 10,400

Miscellaneous expense. 17,700

Total expenses 110,500

Net operating income $9,300

Required:Prepare the performance report that shows both activity variances and revenue and spending variances

Actual results Revenue/ Spending Variances Flexible Budget Activity Variances Planning Budget