Adger Corporation is a service company that measures its
output based on the number of customers served. The company
provided the following fixed and variable cost estimates that it
uses for budgeting purposes and the actual results for May as shown
below:
Fixed Element
per Month Variable Element per Customer Served Actual
Total
for May
Revenue $ 6,600 $ 213,500
Employee salaries and wages $ 62,000 $ 2,300 $ 141,100
Travel expenses $ 540 $ 15,700
Other expenses $ 41,000 $ 38,900
When preparing its planning budget the company estimated that
it would serve 30 customers per month; however, during May the
company actually served 35 customers.
11. What amount of employee salaries and wages would be
included in Adger’s planning budget for May?
12. What amount of travel expenses would be included in
Adger’s planning budget for May?
13. What amount of other expenses would be included in Adger’s
planning budget for May?
14. What activity variance would Adger report in May with
respect to its revenue? (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.)
15. What activity variances would Adger report with respect to
each of its expenses 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.)