Exercise 9-8 Flexible Budgets and Activity Variances [LO9-1, LO9-2]

Jakes Roof Repair has provided the following data concerning its costs:

	Fixed Cost per Month			Cost per Repair-Hour
Wages and salaries	$	20,800		$	15.00
Parts and supplies				$	7.40
Equipment depreciation	$	2,720		$	0.55
Truck operating expenses	$	5,730		$	1.60
Rent	$	4,680
Administrative expenses	$	3,870		$	0.80

For example, wages and salaries should be $20,800 plus $15.00 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,700 repair-hours. The company expects its sales to be $50.00 per repair-hour.

Required:

Compute the companys activity variances for May. (Indicate the effect of each variance with "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance)

Jake's Roof Repair Activity Variances For the Month Ended May 31 Revenue Expenses: Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Administrative expenses Total expense Net operating income