Jake’s Roof Repair has provided the following data concerning its costs: For exa
ID: 2545781 • Letter: J
Question
Jake’s Roof Repair has provided the following data concerning its costs:
For example, wages and salaries should be $20,900 plus $15.00 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,700 repair-hours. The company expects its sales to be $52.00 per repair-hour.
Required:
Compute the company’s activity variances for May. (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.)
Fixed Costper Month Cost per
Repair-Hour Wages and salaries $ 20,900 $ 15.00 Parts and supplies $ 7.10 Equipment depreciation $ 2,790 $ 0.35 Truck operating expenses $ 5,710 $ 1.70 Rent $ 4,640 Administrative expenses $ 3,890 $ 0.70
Explanation / Answer
Jake's Roof Repair Activity Variances For the month ended May Planning Budget Flexible Budget Variance ( a ) Repair Hours 2,800 2,700 ( b) Revenue ( a ) X $ 52.00 $ 1,45,600.00 $ 1,40,400.00 $ 5,200.00 U Expenses : ( c) Wages and Salaries ( $ 20,900 ) + ( $ 15.00 X (a) ) $ 62,900.00 $ 61,400.00 $ 1,500.00 F ( d ) Parts and Supplies $ 7.10 X (a) $ 19,880.00 $ 19,170.00 $ 710.00 F ( e ) Equipment Depreciation ( $ 2,790 ) + ( $ 0.35 X (a) ) $ 3,770.00 $ 3,735.00 $ 35.00 F ( f ) Truck operating expenses ( $ 5,710 ) + ( $ 1.70 X (a) ) $ 10,470.00 $ 10,300.00 $ 170.00 F ( g ) Rent $ 4,640 $ 4,640.00 $ 4,640.00 $ - N ( h ) Administrative Expenses ( $ 3,890 ) + ( $ 0.70 X (a) ) $ 5,850.00 $ 5,780.00 $ 70.00 F ( i) Total Expense $ 1,07,510.00 $ 1,05,025.00 $ 2,485.00 F Net operating Income $ 38,090.00 $ 35,375.00 $ 2,715.00 U U = Unfavourable F = Favourable N = No Effect
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