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				$	276		$	35,890
Technician wages	$	8,100					$	7,950
Mobile lab operating expenses	$	5,000		$	31		$	9,180
Office expenses	$	2,600		$	4		$	3,010
Advertising expenses	$	1,570					$	1,640
Insurance	$	2,860					$	2,860
Miscellaneous expenses	$	930		$	1		$	375

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $5,000 plus $31 per job, and the actual mobile lab operating expenses for February were $9,180. The company expected to work 140 jobs in February, but actually worked 150 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.)

AirQual Test Corporation
Flexible Budget Performance Report
For the Month Ended February 28
	Actual Results			Flexible Budget			Planning Budget
Jobs	150
Revenue	$35,890
Expenses:
Technician wages	7,950
Mobile lab operating expenses	9,180
Office expenses	3,010
Advertising expenses	1,640
Insurance	2,860
Miscellaneous expenses	375
Total expense	25,015
Net operating income

Answer 1

	AirQual Test Corporation
	Flexible Budget Performance Report
	For the Month Ended February 28
	Actual Results	Revenue and spending variances		Flexible Budget	Activity variances		Planning Budget
Jobs	150			150			140
Revenue	35890	5510	U	41400	2760	F	38640
Expenses:
Technician wages	7950	150	F	8100	0	None	8100
Mobile lab operating expenses	9180	470	F	9650	310	U	9340
Office expenses	3010	190	F	3200	40	U	3160
Advertising expenses	1640	70	U	1570	0	None	1570
Insurance	2860	0	None	2860	0	None	2860
Miscellaneous expenses	375	705	F	1080	10	U	1070
Total expense	25015	1445	F	26460	360	U	26100
Net operating income	10875	4065	U	14940	2400	F	12540