Exercise 9-8 Flexible Budgets and Activity Variances [Lo9-1, Lo9-2] Jake\'s Roof

Question

Exercise 9-8 Flexible Budgets and Activity Variances [Lo9-1, Lo9-2] Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost Cost per per Month Repair-Hour Wages and salaries Parts and supplies $15.00 7.70 $21,300 Equipment depreciation 2,740 e.30 Truck operating expenses 5,710 1.80 Rent 4,700 Administrative expenses 3,890 0.40 For example, wages and salaries should be $21,300 plus $15.00 per repair-hour. The company expected to work 2,500r epair-hours in May, but actually worked 2,400 repair-hours. The company expects its sales to be $50.00 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.) Jake's Roof Repair For the Month Ended May 31 Parts and supplies

Explanation / Answer

Prepare activity variance :

Revenue 5000 U Expense Wages and salaries 1500 F Parts and supplies 770 F Equipment depreciation 30 F Truck operating expense 180 F Rent None Administrative expense 40 F Total expense 2520 F Net operating income 2480 U

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