AirQual Test Corporation provides on-site air quality testing services. The comp

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: Variable Fixed Component Component per Actual Total per Month Job $276 Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses $ 8,600 $ 4,900 2,400 1,580 2,890 $ 940 for February $ 38,650 $ 8,450 $ 9,690 $ 2,550 $ 1,650 $ 2,890 $ 39!5 $ 33 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 $9,690. The company expected to work 150 jobs in February, but actually worked 154 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.)

Explanation / Answer

Flexible budget performance report :

Actual results Revenue and spending variance Flexible budget Activity variance Planning budget Jobs 154 154 150 Revenue 38650 3854 U 42504 1104 F 41400 Expenses Technician wages 8450 150 F 8600 0 None 8600 Mobile lab operating expenses 9690 292 F 9982 132 U 9850 Office expenses 2550 158 F 2708 8 U 2700 Advertising expenses 1650 70 U 1580 0 None 1580 Insurance 2890 0 None 2890 0 None 2890 Miscellaneous expense 395 699 F 1094 4 U 1090 Total expenses 25625 1229 F 26854 144 U 26710 Net operating income 13025 2625 U 15650 960 F 14690

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