Exercise 9-17 Flexible Budget Performance Report [LO9-1, LO9-4] AirQual Test Cor

Question

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

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following data concerning its operations:

Fixed
Component
per Month

Variable
Component
per Job

Actual
Total for
February

  Revenue

$

277     

$

38,800    

  Technician wages

$

8,100      

$

7,950    

  Mobile lab operating expenses

$

4,800      

$

26     

$

8,860    

  Office expenses

$

2,600      

$

3     

$

2,900    

  Advertising expenses

$

1,560      

$

1,630    

  Insurance

$

2,870      

$

2,870    

  Miscellaneous expenses

$

970      

$

1     

$

425    

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $26 per job, and the actual mobile lab operating expenses for February were $8,860.

     The company expected to work 150 jobs in February, but actually worked 146 jobs.

Required:

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following data concerning its operations:

Explanation / Answer

AirQual Test Corporation :

Particulars:::::::::::::::::Revenue and spending variance:::::::::::::::::Activity variance

Revenue:::::::::::::::::::::::::::::::::::$1,642 :U:::::::::::::::::::::::::::::::::::::$1108:U

Less:Expenses

Technical Wages::::::::::::::::::::::::::::::::$150:::::F::::::::::::::::::::::::::::::::::::::::::::::0: NONE

Mobile lab operating expenses:::::::::$264:::::U::::::::::::::::::::::::::::::::::::::::::::$104:F

Office expenses::::::::::::::::::::::::::::::::$138::::::F::::::::::::::::::::::::::::::::::::::::::::$12::F

Advertising expenses:::::::::::::::::::::::$70 ::::::U :::::::::::::::::::::::::::::::::::::::::::::0::::NONE

Insurance::::::::::::::::::::::::::::::::::::::::0:::::::::::NONE::::::::::::::::::::::::::::::::::::::0::::NONE

Miscellaneous expenses::::::::::::::$691:::::::F:::::::::::::::::::::::::::::::::::::::::::::::4::::::::F

Total Expense::::::::::::::::::::::::::::::$645::::::::F:::::::::::::::::::::::::::::::::::::::::::::::120:::F

Net operating Income:::::::::::::::::$997::::::::U::::::::::::::::::::::::::::::::::::::::::::::::988::U

_________________________________________________________________________-

working notes"

Revenue::146*277 ::::::$40,442-38,800   =$1,642

Technical Wages=8,100 -7,950=$150

Mobile lab operating expenses=4,800    + 26 *146=$8596 -8,860=264

Office expenses=2,600     + 3 * 146=3038- 2,900 =$138

Advertising expenses=1,560    -1,630=$70   

Insurance::::::::::::::::2,870 -2,870 =0

Miscellaneous expenses=970 + 1 *146=1116-$425 =$691

Activity variance:::::::::::::

Revenue = 150 *277 - 146 *277=$41,550-$40,442=$1108

Mobile lab operating expenses=150* 26 -146*26=$3900-3796=$104

Office expenses::=3*150-3*146=$450-438=$12

Miscellaneous expenses:::::::=150*1-146*1=150-146=4

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