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				$	278		$	33,390
Technician wages	$	8,300					$	8,150
Mobile lab operating expenses	$	4,900		$	30		$	8,640
Office expenses	$	2,400		$	3		$	2,640
Advertising expenses	$	1,610					$	1,680
Insurance	$	2,900					$	2,900
Miscellaneous expenses	$	940		$	2		$	505

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $30 per job, and the actual mobile lab operating expenses for February were $8,640. The company expected to work 130 jobs in February, but actually worked 138 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

	Actual	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Jobs	138			138			130
Revenue	33390	4974	U	38364	2224	F	36140
Expenses:
Technician wages	8150	150	F	8300	0	None	8300
Mobile lab operating expenses	8640	400	F	9040	240	U	8800
Office expenses	2640	174	F	2814	24	U	2790
Advertising expenses	1680	70	U	1610	0	None	1610
Insurance	2900	0	None	2900	0	None	2900
Miscellaneous expenses	505	711	F	1216	16	U	1200
Total expenses	24515	1365	F	25880	280	U	25600
Net operating income	8875	3609	U	12484	1944	F	10540