Question

Crovo Corporation uses customers served as its measure of activity. During December, the company budgeted for...

Crovo Corporation uses customers served as its measure of activity. During December, the company budgeted for 58,000 customers, but actually served 60,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December:


Data used in budgeting:

Fixed element
per month
Variable element
per customer
  Revenue $ 3.00          
  Wages and salaries $ 21,900         $ 1.05          
  Supplies $ 0         $ 0.70          
  Insurance $ 8,900         $ 0.00          
  Miscellaneous $ 4,900         $ 0.50          

Actual results for December:
  Revenue $ 178,300
  Wages and salaries $ 84,000
  Supplies $ 40,100
  Insurance $ 9,900
  Miscellaneous $ 40,100

Required:

Complete the report showing the company's revenue and spending variances for December. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Crovo Corporation
Revenue and Spending Variances
For the Month Ended December 31
  Revenue $          (Click to select)   U   F   None   
  Expenses:
       Wages and salaries          (Click to select)   U   None   F    
       Supplies          (Click to select)   U   None   F   
       Insurance          (Click to select)   None   U   F   
       Miscellaneous          (Click to select)   U   F   None   
  Total expense          (Click to select)   F   None   U   
  Net operating income $          (Click to select)   None   U   F   
Required:

Complete the company's flexible budget for May based on the actual level of activity for the month. (Input all amounts as positive values. Omit the "$" sign in your response.)

Hiles Corporation
Flexible Budget
For the Month Ended May 31
  Actual customers served   
  Revenue $   
  Expenses:
  Wages and salaries   
  Supplies   
  Insurance   
  Miscellaneous   
  Total expense   
  Net operating income $   

Homework Answers

Answer #1
Flexible Budget
For the Month Ended May 31
Actual customers served 60000
Revenue 180000 =60000*3
Expenses:
Wages and salaries 84900 =21900+(60000*1.05)
Supplies 42000 =60000*0.7
Insurance 8900
Miscellaneous 34900 =4900+(60000*0.5)
Total expense 170700
Net operating income 9300
Revenue and Spending Variances
For the Month Ended May 31
Revenue 1700 U
Expenses:
Wages and salaries 900 F
Supplies 1900 F
Insurance 1000 U
Miscellaneous 5200 U
Total expense 3400 U
Net operating income 5100 U
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