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				$	279		$	33,520
Technician wages	$	8,600					$	8,450
Mobile lab operating expenses	$	4,900		$	33		$	9,030
Office expenses	$	2,500		$	2		$	2,610
Advertising expenses	$	1,580					$	1,650
Insurance	$	2,860					$	2,860
Miscellaneous expenses	$	970		$	2		$	535

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $33 per job, and the actual mobile lab operating expenses for February were $9,030. The company expected to work 130 jobs in February, but actually worked 132 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	132
Revenue	$33,520
Expenses:
Technician wages	8,450
Mobile lab operating expenses	9,030
Office expenses	2,610
Advertising expenses	1,650
Insurance	2,860
Miscellaneous expenses	535
Total expense	25,135
Net operating income	$8,385

Answer 1

Particulars	Actual	Revenue and spending variance		Flexible budget	Activity variance		Static budget
Jobs	132			132			130
Revenue	33520	3308	U	36828	558	F	36270
Expenses
technician wages	8450	150	U	8600	0		8600
Mobile Lab operating	9030	226	F	9256	66	U	9190
Office expense	2610	154	F	2764	4	U	2760
Advertising expense	1650	70	U	1580	0		1580
Insurance	2860	0		2860	0		2860
Misc. expense	535	699	F	1234	4	U	1230
Total expense	25135	1159	F	26294	74	U	26220
Net operating income	8385	2149	U	10534	484	F	10050