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		$	30,610
Technician wages	$	8,200					$	8,050
Mobile lab operating expenses	$	4,700		$	32		$	8,380
Office expenses	$	2,600		$	4		$	2,930
Advertising expenses	$	1,560					$	1,630
Insurance	$	2,870					$	2,870
Miscellaneous expenses	$	960		$	1		$	385

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $32 per job, and the actual mobile lab operating expenses for February were $8,380. 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. (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 results	Revenue and spending variances		Flexbile budget	Activity variances		Planning budget
Jobs	126			126			120
Revenue	30610	4418	U	35028	1668	F	33360
Expenses:
Technician wages	8050	150	F	8200	0	None	8200
Mobile lab operating expenses	8380	352	F	8732	192	U	8540
Office expenses	2930	174	F	3104	24	U	3080
Advertising expenses	1630	70	U	1560	0	None	1560
Insurance	2870	0	None	2870	0	None	2870
Miscellaneous expenses	385	701	F	1086	6	U	1080
Total expense	24245	1307	F	25552	222	U	25330
Net operating income	6365	3111	U	9476	1446	F	8030