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: Variable Fixed Component Component per Actual Total for February Job per Month $27,610 $8,350 $8,170 $ 2,780 $ 1,660 $ 2,850 $ $276 Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses $ 8,500 $4,700 $ 2,600 $1,590 $2,850 $ $33 $ 3 Insurance Miscellaneous expenses $ 960 1 375 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $33 per job, and the actual mobile lab operating expenses for February were $8,170. The company expected to work 110 jobs in February, but actually worked 116 jobs Required: Prepare a flexible budget performance report showing AirQual 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 (i.e., zero variance). Input all amounts as positive values.)

Answer 1

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Jobs	116			116			110
Revenue	27610	4406	U	32016	1656	F	30360
Expenses:
Technician wages	8350	150	F	8500	0	None	8500
Mobile lab operating expenses	8170	358	F	8528	198	U	8330
Office expenses	2780	168	F	2948	18	U	2930
Advertising expenses	1660	70	U	1590	0	None	1590
Insurance	2850	0	None	2850	0	None	2850
Miscellaneous expenses	375	701	F	1076	6	U	1070
Total expense	24185	1307	F	25492	222	U	25270
Net operating income	3425	3099	U	6524	1434	F	5090