Question

Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost Cost per Repair- per Hour Month Wages and salaries $20,700 - $15.00 Parts and supplies $ 7.40 Equipment $ 2,700 $ 0.60 depreciation Truck operating $5.780 $ 1.80 expenses Rent $ 4,660 Administrative $ 3,850 $ 0.40 expenses For example, wages and salaries should be $20,700 plus $15.00 per repair-hour. The company expected to work 2.900 repair-hours in May, but actually worked 2.800 repair-hours. The company expects its sales to be $49.00 per repair hour. Required: Compute the company's activity variances for May (indicate the effect of each variance by selecting "Ffor favorable "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Jake's Roof Repair Activity Variances For the Month Ended May 31 137,200 (62,700) Revenue Expenses: Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Administrative expenses Total expense Net operating income

Answer 1

Solution:

Jake's Roof Repair
Activity Variances
For the month ended May 31
Particulars	Flexible Budget (2800 hours)	Planning Budget (2900 hours)	Variances	Fav. / Unfav.
Revenue	$137,200.00	$142,100.00	$4,900.00	U
Expenses:
Wages and Salaries	$62,700.00	$64,200.00	$1,500.00	F
Parts and Supplies	$20,720.00	$21,460.00	$740.00	F
Equipment depreciation	$4,380.00	$4,440.00	$60.00	F
Truck operating expense	$10,820.00	$11,000.00	$180.00	F
Rent	$4,660.00	$4,660.00	$0.00	None
Administrative expense	$4,970.00	$5,010.00	$40.00	F
Total Expenses	$108,250.00	$110,770.00	$2,520.00	F
Net Operating Income	$28,950.00	$31,330.00	$2,380.00	U