Question

Air Qual 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 Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses Variable A ctual Total Component per Job for February $ 35,75e $ 8,150 $ 8.980 $ 2,330 $ 8,300 $ 4,800 $2,200 $ 1,580 $ 2,800 $ 970 5 555 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4.800 plus $31 per job, and the actual mobile lab operating expenses for February were $8.980. The company expected to work 140 jobs in February, but actually worked 142 jobs. Required: Prepare a flexible budget performance report showing ArQual 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 (.e., zero variance). Input all amounts os positive values.) Allroual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 1 of 3 I Next > o e

Answer 1

Answer

• Requirement

	Actual Result	Revenue & Spending Variance		Flexible Budget	Activity variance		Planning Static Budget
Jobs	142			142			140
Revenues	$               35,750.00	$         3,300.00	U	$             39,050.00	$                550.00	F	$          38,500.00
Expenses:
Technical wages	$                 8,150.00	$             150.00	F	$               8,300.00	$                         -	None	$             8,300.00
Mobile lab operating expenses	$                 8,980.00	$             222.00	F	$               9,202.00	$                  62.00	U	$             9,140.00
Office expenses	$                 2,330.00	$             154.00	F	$               2,484.00	$                     4.00	U	$             2,480.00
Advertising expense	$                 1,650.00	$               70.00	U	$               1,580.00	$                         -	None	$             1,580.00
Insurance	$                 2,880.00	$                      -	N	$               2,880.00	$                         -	None	$             2,880.00
Miscellaneous expense	$                     555.00	$             699.00	F	$               1,254.00	$                     4.00	U	$             1,250.00
Total Expenses	$               24,545.00	$         1,155.00	F	$             25,700.00	$                  70.00	U	$          25,630.00
Net Operating Income	$               11,205.00	$         2,145.00	U	$             13,350.00	$                480.00	F	$          12,870.00

--Working

		WORKING COLUMNS					Flexible Budget	Planning Static Budget
Jobs							142	140
Revenues				$ 275.00			$             39,050.00	$          38,500.00
Expenses:
Technical wages	(	$         8,300.00	)	$           -	x 142 or 140		$               8,300.00	$             8,300.00
Mobile lab operating expenses	(	$         4,800.00	)	$    31.00	x 142 or 140	)	$               9,202.00	$             9,140.00
Office expenses	(	$         2,200.00	+	$      2.00	x 142 or 140	)	$               2,484.00	$             2,480.00
Advertising expense	(	$         1,580.00	+	$           -	x 142 or 140	)	$               1,580.00	$             1,580.00
Insurance	(	$         2,880.00	+	$           -	x 142 or 140		$               2,880.00	$             2,880.00
Miscellaneous expense	(	$            970.00	)	$      2.00	x 142 or 140		$               1,254.00	$             1,250.00
Total Expenses		$      20,730.00		$    35.00			$             25,700.00	$          25,630.00
Net Operating Income							$             13,350.00	$          12,870.00