Question

Putin Company cleans chimneys. Last year Putin planned to clean 400 roofs at $360 per roof. In an attempt to attract new customers, Putin reduced their cleaning fee to $320 per roof. As a result, the actual number of roofs cleaned was 480.

Clearly label and indicate answers to these questions at the TOP of the answer box. Show your work after all of the answers.

A. Compute the static budget amount for revenue.
B. Compute the flex budget amount for revenue.
C. Compute the actual amount of revenue.

D. Compute the volume variance for revenue and label it as F or U.
E. Compute the sales price variance and label it as F or U.

Answer 1

Requirement A

Static Budget amount of Revenue

= 400 roof X $ 360 per roof

= $144,000

Requirement B

Flex Budget amount of Revenue

= 480 roof X $ 360 per roof

= $172,800

Requirement C

Actual Budget amount of Revenue

= 480 roof X $ 320 per roof

= $153,600

Requirement D

Volume variance for revenue

=(480 roof -400 roofs)X $ 360 per roof

= $28,800 Favourable

Requirement E

Price variance for revenue

= ($ 320 per roof - $360 per roof) X 480 roofs

= $19,200 Unfavourable