Question

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following data concerning its operations:

	Fixed Component per Month		Variable Component per Job		Actual Total for February
Revenue			$	277	$	30,490
Technician wages	$	8,400			$	8,250
Mobile lab operating expenses	$	4,900	$	26	$	8,180
Office expenses	$	2,500	$	4	$	2,830
Advertising expenses	$	1,570			$	1,640
Insurance	$	2,880			$	2,880
Miscellaneous expenses	$	920	$	1	$	345

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $26 per job, and the actual mobile lab operating expenses for February were $8,180.

The company expected to work 120 jobs in February, but actually worked 114 jobs.

Required:

Complete the 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

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Jobs	114			114			120
Revenue	30490	1088	U	31578	1662	U	33240
Expenses:
Technician wages	8250	150	F	8400	0	None	8400
Mobile lab operating expenses	8180	316	U	7864	156	F	8020
Office expenses	2830	126	F	2956	24	F	2980
Advertising expenses	1640	70	U	1570	0	None	1570
Insurance	2880	0	None	2880	0	None	2880
Miscellaneous expenses	345	689	F	1034	6	F	1040
Total expense	24125	579	F	24704	186	F	24890
Net operating income	6365	509	U	6874	1476	U	8350