Question

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...

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:

Fixed Component
per Month
Variable
Component per Job
Actual Total
for February
Revenue $ 276 $ 30,370
Technician wages $ 8,500 $ 8,350
Mobile lab operating expenses $ 4,900 $ 30 $ 8,340
Office expenses $ 2,200 $ 4 $ 2,530
Advertising expenses $ 1,620 $ 1,690
Insurance $ 2,860 $ 2,860
Miscellaneous expenses $ 930 $ 1 $ 355

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $30 per job, and the actual mobile lab operating expenses for February were $8,340. The company expected to work 120 jobs in February, but actually worked 126 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February.

AirQual Test Corporation
Flexible Budget Performance Report
For the Month Ended February 28
Actual Results Flexible Budget Planning Budget
Jobs 126
Revenue $30,370
Expenses:
Technician wages 8,350
Mobile lab operating expenses 8,340
Office expenses 2,530
Advertising expenses 1,690
Insurance 2,860
Miscellaneous expenses 355
Total expense 24,125
Net operating income $6,245

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