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:

	Fixed Component per Month			Variable Component per Job			Actual Total for February
Revenue				$	278		$	36,170
Technician wages	$	8,000					$	7,850
Mobile lab operating expenses	$	5,000		$	32		$	9,320
Office expenses	$	2,700		$	4		$	3,110
Advertising expenses	$	1,590					$	1,660
Insurance	$	2,890					$	2,890
Miscellaneous expenses	$	920		$	2		$	505

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $5,000 plus $32 per job, and the actual mobile lab operating expenses for February were $9,320. The company expected to work 140 jobs in February, but actually worked 144 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

Flexible Budget Performance report
			Actual	Revenue and Spending V.	Flexible	Activity Variance	Planned
Number of jobs		144			144			140
Revenue			36170	3862	U	40032	1112	F	38920
Cost:				0
Technician wages		7850	150	F	8000	0		8000
Mobile lab operating expense	9320	288	F	9608	128	U	9480
Office expense		3110	166	F	3276	16	U	3260
Advertising expense		1660	70	U	1590	0		1590
Insurance			2890	0		2890	0		2890
Misc. expense		505	703	F	1208	8	U	1200
Total cost			25335	1237	F	26572	152	U	26420
Net Income		10835	2625	U	13460	960	F	12500