Question

Fixed Cost per Month

Cost per Repair-Hour

Wages and salaries	$	21,200		$	15.00
Parts and supplies				$	7.40
Equipment depreciation	$	2,720		$	0.40
Truck operating expenses	$	5,770		$	1.80
Rent	$	4,620
Administrative expenses	$	3,830		$	0.60

For example, wages and salaries should be $21,200 plus $15.00 per repair-hour. The company expected to work 2,600 repair-hours in May, but actually worked 2,500 repair-hours. The company expects its sales to be $50.00 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.)

Jake’s Roof Repair
Activity Variances
For the Month Ended May 31
	Flexible Budget	Planning Budget	Activity Variances
Repair-hours	2,500	2,600
Revenue				U
Expenses:
Wages and salaries				F
Parts and supplies				F
Equipment depreciation				F
Truck operating expenses				F
Rent				None
Administrative expenses				F
Total expense				F
Net operating income				U

Answer 1