AirQual Test Corporation provides on-site air quality testing services. The comp

Question

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February Variable Fixed Component Component per Actual Total Job $276 for February 38,650 $ 8,050 9,790 2,800 $ 1,660 2,860 per Month Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses 8,200 $ 5,000 2,500 $ 1,590 2,860 $ 970 $ 33 $ 425 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $5,000 plus $33 per job, and the actual mobile lab operating expenses for February were $9,790. The company expected to work 150 jobs in February, but actually worked 156 jobs Required Prepare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Actual Results Flexible Budget Planning Budget Jobs 156

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Jobs 156 156 150 Revenue 38650 4406 U 43056 1656 F 41400 Expenses: Technician wages 8050 150 F 8200 0 None 8200 Mobile lab operating expenses 9790 358 F 10148 198 U 9950 Office expenses 2800 168 F 2968 18 U 2950 Advertising expenses 1660 70 U 1590 0 None 1590 Insurance 2860 0 None 2860 0 None 2860 Miscellaneous expenses 425 701 F 1126 6 U 1120 Total expenses 25585 1307 F 26892 222 U 26670 Net operating income 13065 3099 U 16164 1434 F 14730

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