Adger Corporation is a service company that measures its output based on the num

Question

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: When preparing its planning budget the company estimated that it would serve 30 customers per month: however, during May the company actually served 35 customers. What amount of revenue would be included in Adger's flexible budget for May? What amount of employee salaries and wages would be included in Adger's flexible budget for May? What amount of travel expenses would be included inAdger's flexible budget for May? What amount of other expenses would be included in Adger's flexible budget for May? What net operating income would appear in Adger's flexible budget for May? What is Adger's revenue variance for May? What is Adger's employee salaries and wages spending variance for May? What is Adger's travel expenses spending variance for May? What is Adger's other expenses spending variance for May? What amount of revenue would be included in Adger's planning budget for May? What amount of employee salaries and wages would be included in Adger's planning budget for May? What amount of travel expenses would be included inAdger's planning, budget for May? What amount of other expenses would be included in Adger's planning budget for May? What activity variance would Adger report in May with respect to its revenue? What activity variances would Adger report with respect to each of iLs expenses?

Explanation / Answer

For flexible budget Actual Customers 35 multiply by Standard Cost/Revenue per unit+Standard Fixed Cost Ans 1 amount of revenue in flexible budget Actula customers *Standard revenue per customer 35*5000 175000 Ans 2 Amount of salary in flexible budget 50000+(35*1100) 88500 Ans 3 Travel expense in flexible budget 35*600 21000 Ans 4 Other expense in flexible Budet 36000 Ans 5 Net Operating Income In flexible budget Revenue 175000 Less: Salary 88500 Travel expenses 21000 Other expenses 36000 Net Operating Income 29500 Ans 6 Revenue variance Revenue Price variance 35*(4571.43-5000) -15000 U Actual price 160000/35 4571.43 Revenue volume variance Budgeted Revenue per customer*( Actual -standard customers) 5000*(35-30) 25000 F Ans 7 Salaries and wage spending variance Actual Salaries-Flexible Budget salaries 88000-88500 -500 F Ans 8 Travel expense spending variance 19000-21000 -2000 F Ans 9 Other expense spending variance 34500-36000 -1500 F Ans 10 to 13 Planning Budget no. of customers 30 Revenue 150000 Salary (50000+(1100*30) 83000 Travel expenses 18000 Other expenses 36000 Ans 14 Activity variance for revenue Revenue volume variance Budgeted Revenue per customer*( Actual -standard customers) 5000*(35-30) 25000 F Ans 15 Activity Variance Flexible Budget Planning Budget Variance Salary 88500 83000 5500 U Travel expenses 21000 18000 3000 U Other expenses 36000 36000 0

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