Question

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			Actual Total for February
Revenue				$	277		$	36,030
Technician wages	$	8,100					$	7,950
Mobile lab operating expenses	$	4,700		$	31		$	8,880
Office expenses	$	2,400		$	2		$	2,530
Advertising expenses	$	1,610					$	1,680
Insurance	$	2,860					$	2,860
Miscellaneous expenses	$	940		$	2		$	525

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $31 per job, and the actual mobile lab operating expenses for February were $8,880. The company expected to work 140 jobs in February, but actually worked 148 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February.

Answer 1

Solution:

AirQual Test Corporation
Flexible Budget Performance Report
For the month ended February
Particulars	Actual results	Revenue and spending variances		Flexible Budget	Activity Variances		Planning Budget
Nos of Jobs	148			148			140
Revenue	$36,030.00	$4,966.00	U	$40,996.00	$2,216.00	F	$38,780.00
Expenses:
Technician Wages	$7,950.00	$150.00	F	$8,100.00	$0.00	None	$8,100.00
Mobile lab operating expenses	$8,880.00	$408.00	F	$9,288.00	$248.00	U	$9,040.00
Office expenses	$2,530.00	$166.00	F	$2,696.00	$16.00	U	$2,680.00
Advertising expenses	$1,680.00	$70.00	U	$1,610.00	$0.00	None	$1,610.00
Insurance	$2,860.00	$0.00	None	$2,860.00	$0.00	None	$2,860.00
Miscellenous expenses	$525.00	$711.00	F	$1,236.00	$16.00	U	$1,220.00
Total Expenses	$24,425.00	$1,365.00	F	$25,790.00	$280.00	U	$25,510.00
Net Income	$11,605.00	$3,601.00	U	$15,206.00	$1,936.00	F	$13,270.00