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 $ 277 $ 36,030 Technician wages $ 8,200 $ 8,050 Mobile lab operating expenses $ 4,800 $ 31 $ 8,980 Office expenses $ 2,300 $ 4 $ 2,710 Advertising expenses $ 1,610 $ 1,680 Insurance $ 2,870 $ 2,870 Miscellaneous expenses $ 960 $ 1 $ 405 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $31 per job, and the actual mobile lab operating expenses for February were $8,980. The company expected to work 140 jobs in February, but actually worked 142 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.)

Answer 1

AirQual Test Corporation
	Static Budget	Flexible Budget	Activity Variance		Actual Results	Revenue / Spending Variance
Jobs	140	142	2	F	142	0	N
Revenue ($277 per job)	38780	39334	554	F	36030	-3304	U
Expenses:
Technician Wages	8200	8200	0	N	8050	150	F
Mobile lab operating expense ($4,800 + $31 per job)	9140	9202	-62	U	8980	222	F
Office expenses ($2,300 + $4 per job)	2860	2868	-8	U	2710	158	F
Advertising expenses	1610	1610	0	N	1680	-70	U
Insurance	2870	2870	0	N	2870	0	N
Miscelleneous Expenses ($960 + ($1 per Job)	1100	1102	-2	U	405	697	F
Total Expenses	25780	25852	-72	U	24695	1157	F
						0
Net Income	13000	13482	482	F	11335	-2147	U