Question

Jake’s Roof Repair has provided the following data concerning its costs:

	Fixed Cost per Month			Cost per Repair-Hour
Wages and salaries	$	21,000		$	15.00
Parts and supplies				$	7.80
Equipment depreciation	$	2,750		$	0.55
Truck operating expenses	$	5,720		$	1.70
Rent	$	4,690
Administrative expenses	$	3,820		$	0.70

For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2,700 repair-hours in May, but actually worked 2,600 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 "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

		Flexible	Activity Variance		Planned
Repair hours		2600			2700
Revenue		127400	4900	U	132300
Expense:
Wages and salaries		60000	1500	F	61500
Parts and supplies		20280	780	F	21060
Equipment dep		4180	55	F	4235
Truck Operating expenses		10140	170	F	10310
Rent		4690	0		4690
Admin expenses		5640	70	F	5710
Total expenses		104930	2575	F	107505
Net Income		22470	2325	U	24795