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PROBLEM 1 - Revenue and Spending Variances - RWO Enterprises is a dog grooming business that has been in operation for the last three years.
PROBLEM 1 - Revenue and Spending Variances - RWO Enterprises is a dog grooming business that has been in operation for the last three years. The company is in the process of preparing its Revenue and Spending Variance report. The company uses the following assumed costs for budgeting purposes: Fixed Cost per Month $1,000 Cost per Dog Groomed $0.70 $ 0.08 $0.30 $0.40 Doggie Treats Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses $ 4,000 $ 8,000 $ 2,000 $1,000 $ 0.05 For example, electricity costs are $1,100 per month plus $0.08 per dog groomed. The company expects to groom 8,000 dogs in January and to collect an average of $7.00 per dog groomed. The actual operating results for January are as follows: RWO Enterprises Income Statement For the Month Ended January 31 8,200 $ 57,000 Actual dogs groomed Revenue Expenses: Doggie Treats Electricity Maintenance Wages and salaries Depreciation Rent Administrative expenses 6,000 1,700 2,300 7,300 8,200 2,200 1,600 29,300 $ 27,700 Total expense Net operating income 1. Prepare a report of the company's revenue and spending variances for January (use the format that is explained on page 3 of the chapter hand-out). 2. How so you think they did this month? Which variances do you think should be investigated and why
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