Question

Jake’s Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair-Hour Wages and salaries $ 20,600 $ 15.00 Parts and supplies $ 7.40 Equipment depreciation $ 2,730 $ 0.40 Truck operating expenses $ 5,770 $ 1.70 Rent $ 4,610 Administrative expenses $ 3,880 $ 0.60 For example, wages and salaries should be $20,600 plus $15.00 per repair-hour. The company expected to work 2,900 repair-hours in May, but actually worked 2,800 repair-hours. The company expects its sales to be $47.00 per repair-hour. Required: Compute the company’s activity variances for May. (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

	Activity variance for May:
				Planning Budget	Flexible Budget	Activity Variances
	Repair hours (x)			2900	2800
	Revenue	($47*x)		136300	131600	4700	U
	Expenses:
	Wages and salaries
	(20600+15x)			64100	62600	1500	F
	Parts and supplies		(7.40*X)	21460	20720	740	F
	Equipment depreciation
	(2730+0.40x)			3890	3850	40	F
	Truck operating expense
	(5770+1.70*x)			10700	10530	170	F
	Rent			4610	4610	0
	Administrative expenses
	(3880+0.60x)			5620	5560	60	F
	Total expenses			110380	107870	2510	F
	Net operating income			25920	23730	2190	U