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: Fixed Element Variable Element Actual per Customer Served 5,800 1,200 $570 Total for May $ 184,000 105,300 $ 16,500 $ 41,600 per Month Revenue Employee salaries and wages 65, 000 Travel expenses Other expenses $44,000 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.

Explanation / Answer

6) Revenue variance = (35*5800-184000) = 19000 U

7) Spending variance of employee salary and wages = (35*1200+65000)-105300 =1700 F

8) Spending variance of travel expense = (570*35)-16500 = 3450 F

9) Other expense spending variance = 44000-41600 = 2400 F

10) Revenue in planning budget = 30*5800 =174000

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