The next two questions are based on the following 11 Adger Corporation is a serv

Question

The next two questions are based on the following 11 Adger Corporation is a service company that measures its output based on the number of customers served. The company s a results and master (static) budget for April 2018 are as follows: anning Master (Static) Budget 50 customers Actual Results Customers served Sales Variable costs Fixed costs 45 customers s 280,000 6DD $ 270,000 6,000 $ 65,250 fYso S 105,000 75,000 s0o 100,000000 ,333 e What is the activity variance in operating income for April 2018? A. S 5,250 Unfavorable B. S 15,250 Favorable C. 15,250 Unfavorable 20,500 Favorable E.S 20,500 Unfavorable 12 What is the revenue variance for April 2018? A. S 10,000 Unfavorable B. S 18,000 Unfavorable C. S 18,000 Favorable D. 28,000 Unfavorable E. s 28,000 Favorable

Explanation / Answer

1) Activity variance in operating income :

Budgeted operating income = 105000

Flexible budget operating income = 84500

Activity variance = 105000-84500 = 20500 U

so answer is $20500 Unfavorable

12) Revenue variance = 252000-270000 = 18000 F

so answer is c) $18000 favorable

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