Tajiri Corporation uses customers served as its measure of activity. The followi

Question

Tajiri Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of May: Tajiri Corporation Comparison of Planning Budget to Actual Results For the Month Ended May 31 Planning Budget Actual Results Variances Customers served 34,000 35,000 Revenue (3.50q) $ 119,000 $ 122,600 $ 3,600 F Expenses: Wages and salaries ($23,400 + $1.24q) 65,560 66,800 1,240 U Supplies ($0.64q) 21,760 19,560 2,200 F Insurance ($5,300) 5,300 5,300 0 Miscellaneous expense ($4,300 + $.33q) 15,520 13,320 2,200 F Total expense 108,140 104,980 3,160 F Net operating income $ 10,860 $ 17,620 $ 6,760 F Required: 1. Prepare the company's flexible budget performance report for May. Label each variance as favorable (F) or unfavorable (U).

Explanation / Answer

Planning Budget Activity Variances Flexible Budget Revenue and spending variances Actual Results Customers served 21,000 1,000 U 22,000 None 22,000 Revenue $ 71,400 $ 74,800 $ 400 F $ 75,200 Expenses Wages and salaries $ 45,410 $ 46,520 None $ 46,520 Supplies $ 10,710 $ 11,220 $ 1,510 F $ 9,710 Insurance $ 4,000 $ 4,000 None $ 4,000 Miscellaneous expenses $ 9,510 $ 9,820 $ 1,310 F $ 8,510 Total expenses 69,630 $ 71,560 $ 2,820 F $ 68,740 Net operating income $ 1,770 $ 1,470 U $ 3,240 $ 3,220 F $ 6,460

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