Question

Domin Corporation bases its budgets on the activity measure customers served. During April, the company planned...

Domin Corporation bases its budgets on the activity measure customers served. During April, the company planned to serve 31,000 customers, but actually served 35,000 customers. Revenue is $4.80 per customer served. Wages and salaries are $33,000 per month plus $1.60 per customer served. Supplies are $1.00 per customer served. Insurance is $12,200 per month. Miscellaneous expenses are $7,400 per month plus $0.20 per customer served.

Prepare a report showing the company's activity variances for April. Indicate in each case whether the variance is favorable (F) or unfavorable (U) (6 points).

Domin Corporation
Activity Variances
For the Month Ended April 30
Planning Flexible Activity
Budget Budget Variances
Customers served (q)...................................
Revenue.............................................................
Expenses:
    
Total expense.................................................
Net operating income....................................

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Answer:-

Domin Corporation
Activity variances
For the month ended April
Particulars Planning Budget Flexible Budget Activity Variances Remark
$ $ $
Customers served 31000 35000
Revenue (a) 31000 customers*$4.80 per customer=148800 35000 customers*$4.80 per customer=168000 19200 Favourable
Expenses:-
Wages & Salaries ($1.60 per customer served*31000 customers)+33000=82600 ($1.60 per customer served*35000 customers)+33000=89000 -6400 Unfavourable
Supplies ($1.00 per customer served*31000 customers)=31000 ($1.00 per customer served*35000 customers)=35000 -4000 Unfavourable
Miscellenous ($.20 per customer served*31000 customers)+7400=13600 ($.20 per customer served*35000 customers)+7400=14400 -800 Unfavourable
Insurance 12200 12200 0 None
Net Opreating income d=a-(b+c) 9400 17400 8000 Favourable
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