Question

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...

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.)

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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
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