Exercise 9-17 Flexible Budget Performance Report [LO9-1, LO9-2, LO9-3, LO9-4] Ai

Question

Exercise 9-17 Flexible Budget Performance Report [LO9-1, LO9-2, LO9-3, LO9-4]

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:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $33 per job, and the actual mobile lab operating expenses for February were $9,590. The company expected to work 150 jobs in February, but actually worked 160 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.)

Fixed Component
per Month Variable
Component per Job Actual Total
for February Revenue $ 275 $ 38,500 Technician wages $ 8,100 $ 7,950 Mobile lab operating expenses $ 4,800 $ 33 $ 9,590 Office expenses $ 2,400 $ 2 $ 2,550 Advertising expenses $ 1,590 $ 1,660 Insurance $ 2,850 $ 2,850 Miscellaneous expenses $ 960 $ 2 $ 565

Explanation / Answer

Solution:

AirQual Test Corporation Flexible Budget Performance Report For the month ended February Particulars Actual results Revenue and spending variances Flexible Budget Activity Variances Planning Budget Nos of Jobs 160 160 150 Revenue $38,500.00 $5,500.00 U $44,000.00 $2,750.00 F $41,250.00 Expenses: Technician Wages $7,950.00 $150.00 F $8,100.00 $0.00 None $8,100.00 Mobile lab operating expenses $9,590.00 $490.00 F $10,080.00 $330.00 U $9,750.00 Office expenses $2,550.00 $170.00 F $2,720.00 $20.00 U $2,700.00 Advertising expenses $1,660.00 $70.00 U $1,590.00 $0.00 None $1,590.00 Insurance $2,850.00 $0.00 None $2,850.00 $0.00 None $2,850.00 Miscellenous expenses $565.00 $715.00 F $1,280.00 $20.00 U $1,260.00 Total Expenses $25,165.00 $1,455.00 F $26,620.00 $370.00 U $26,250.00 Net Income $13,335.00 $4,045.00 U $17,380.00 $2,380.00 F $15,000.00

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.