Crovo Corporation uses customers served as its measure of activity. During Decem

Question

Crovo Corporation uses customers served as its measure of activity. During December, the company budgeted for 61,000 customers, but actually served 63,000 customers The company has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting Fixed element per month Variable element per customer Revenue Wages and salaries Supplies Insurance Miscellaneous $22,200 0 $ 9,200 $5,200 $3.00 $1.08 $0.73 $0.00 $0.53 Actual results for December: Revenue Wages and salaries $ Supplies Insurance Miscellaneous 187,300 81,000 44,090 10,200 44,090

Explanation / Answer

Actual Flexible budget Revenue and spending variances Revenue 187300 189000 1700 U Expenses: Wages and salaries 81000 90240 9240 F Supplies 44090 45990 1900 F Insurance 10200 9200 1000 U Miscellaneous 44090 38590 5500 U Total expense 179380 184020 4640 F Net operating income 7920 4980 2940 F

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