. Gilligan Corporation bases its budgets on the activity measure customers served. During July, the company planned to serve 30,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting:

Fixed element Variable element

per month per customer

Revenue - $14.00

Wages and Salaries $35,100 $4.25

Supplies $0 $1.80

Insurance $10,000 $0.00

Miscellaneous $4,700 $1.00

The companys income statement for July is as follows:

Gilligan Corporation

Income Statement

For the month ended July 31, 20XX

Planned customers served: 30,000

Revenue $476,000

Expenses:

Wages and salaries $181,000

Supplies 62,100

Insurance 10,000

Miscellaneous 35,600 (288,700)

Net operating income $187,300

Actual customers served: 34,000

Income statement totals are the amounts to be used for the planning budget.

Required: complete the following report by preparing a planning budget for an activity level of 30,000 customers anticipated. Compare the companys actual activity level for July. Indicate variance amounts and in each case whether the variance is favorable (F) or unfavorable (U).

Gilligan Corporation

Activity Variances

For the month ended July 31, 20XX

Planning Actual Activity

Budget Results Variances

Customers served

Revenue

Expenses:

Wages and salaries

Supplies

Insurance

Miscellaneous

Total expense

Net operating income