Question

Korsak Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fised Element Variable Element per per Month Customer Served Revenue 5,500 Employee salaries and 43,700 $ 1,100 wages Travel expenses $ 500 Other expenses $ 43,200 The planning budget for October was based on serving 23 customers, but a total of 19 customers were actually served during October The activity varlance for "Travel expenses" for October would have been closest to: Multiple Choice $2,000 F $2,300 F $2,000 U

Answer 1

Answer - (a) $2000 F

Explanation -

Activity variance for travel expense = Planned budget - Flexible budget

= (500*19) - (500*23)

Activity variance for travel expense = 2000 F