Adger Corporation is a service company that measures its output based on the num
ID: 2556954 • Letter: A
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:
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.
What amount of revenue would be included in Adger’s flexible budget for May?
What amount of employee salaries and wages would be included in Adger’s flexible budget for May?
What amount of travel expenses would be included in Adger’s flexible budget for May?
What amount of other expenses would be included in Adger’s flexible budget for May?
What net operating income would appear in Adger’s flexible budget for May?
6. What is Adger’s revenue variance 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.)
What is Adger’s employee salaries and wages spending variance 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.)
What is Adger’s travel expenses spending variance 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.)
What is Adger’s other expenses spending variance 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.)
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:
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.
Required: 1.What amount of revenue would be included in Adger’s flexible budget for May?
2.What amount of employee salaries and wages would be included in Adger’s flexible budget for May?
3.What amount of travel expenses would be included in Adger’s flexible budget for May?
4.What amount of other expenses would be included in Adger’s flexible budget for May?
5.What net operating income would appear in Adger’s flexible budget for May?
6. What is Adger’s revenue variance 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.)
7.What is Adger’s employee salaries and wages spending variance 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.)
8.
What is Adger’s travel expenses spending variance 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.)
9.What is Adger’s other expenses spending variance 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.)
Varlable Element per Element Customer Total per Month Served for May Fixed Actual $6,200 $196,000 Revenue Employee salarles and wages Travel expenses Other expenses $69,000 $1,600 $122,900 $610 17,700 $45,200 $48,000
Explanation / Answer
1.
Revenue:
Variable element per customer served
$6,200
Actual Activity
35
Amount in flexible budget
$217,000
2.
Employee salaries and wages:
Variable element per customer served
$ 1,600
Actual Activity
35
Variable portion of the amount
$ 56,000
Fixed element per month
$ 69,000
Amount in flexible budget
$ 125,000
3.
Travel expenses:
Variable element per customer served
$ 610
Actual Activity
35
Amount in flexible budget
$ 21,350
4.
Amount of other expenses
$ 48,000
******Answered first four questions.
Revenue:
Variable element per customer served
$6,200
Actual Activity
35
Amount in flexible budget
$217,000
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