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Exercise 9-17 Flexible Budget Performance Report (LO9-1, LO9-2, LO9-3, LO9-4] AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February Fixed Component per Month Variable Component per Job $276 Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses $8,600 $4,700 $2,700 $1,570 $2,880 $ 970 Actual Total for February $30, 370 $ 8,450 $ 8,500 $ 2,910 $ 1,640 $ 2,880 $ 515 $ 33 $ 3 $ 2 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $33 per job, and the actual mobile lab operating expenses for February were $8,500. The company expected to work 120 jobs in February, but actually worked 130 jobs. Required: Prepare a flexible budget performance report showing Air Qual Test Corporation's revenue and spending variances and activity variances for February (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect i.e., zero variance). Input all amounts as positive values.) AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Actual Flexible Results Budget 130 Planning Budget Jobs Revenue 30,370 Expenses: | Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses Total expense Net operating income 8,450 8,500 2,910 1,640 2,880 515 24,895 $5,475

Answer 1

Soution: AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Jobs Revenue and spending variance** actual results 130 Flexible budget Activity variance* Planning budget 130 120 30370 55100 35880 2760 F 33120 Revenue Expenses: Technician wages Mobile lab operating expenses office expenses Advertising expenses Insurance Miscellaneous expenses Total expenses Net operating income 8450 8500 29101 1640 28801 515 24895 150 F 490 F 180 F 70U O None 715 F 1465 F 4045 U 8600 O None 8990 3300 3090 300 15700 None 28800 None 1230 200 26360 380 V 95202380 F 8600 8660 3060 1570 2880 1210 25980 7140 5475 * Activity Variances = Flexible Budget - Planning budget **Spending Variances =Flexible budget - actual results 33 working for flexible budget and planning fixed component variable component per job flexible budget Planning budget c=a+b* 130 d=a+b*120 Revenue 276 35880 33120 Expenses: Technician wages 8600 8600 8600 Mobile lab operating expenses 4700 89901 8660 office expenses 2700 3090 3060 Advertising expenses 1570 15701 1570 Insurance 2880 2880 2880 Miscellaneous expenses 970 1230 1210 Total expenses 26360 25980 Net operating income 95201 7140