UrLink Company is a newly formed company specializing in high-speed Internet ser

Question

UrLink Company is a newly formed company specializing in high-speed Internet service for home and business. The owner, Lenny Kirkland, had divided the company into two segments: Home Internet Service and Business Internet Service. Each segment is run by its own supervisor, while basic selling and administrative services are shared by both segments.

Lenny has asked you to help him create a performance reporting system that will allow him to measure each segment’s performance in terms of its profitability. To that end, the following information has been collected on the Home Internet Service segment for the first quarter of 2017.

Budgeted

Actual

Prepare a responsibility report for the first quarter of 2017 for the Home Internet Service Segment.

Budgeted

Actual

Service revenue $24,500 $25,500 Allocated portion of:      Building depreciation 10,200 10,200      Advertising 5,500 4,300      Billing 3,300 3,300      Property taxes 1,200 1,200 Material and supplies 1,600 1,100 Supervisory salaries 8,900 9,700 Insurance 3,900 3,000 Wages 3,300 3,500 Gas and oil 2,700 3,100 Equipment depreciation 1,400 1,300

Explanation / Answer

Particulars Budget Actual Variance Service revenue 24500 25500 1000 Allocated portion of: Building depreciation 10,200 10,200 0 Advertising 5,500 4,300 -1,200 Billing 3,300 3,300 0 Property taxes 1,200 1,200 0 Material and supplies 1,600 1,100 -500 Supervisory salaries 8,900 9,700 800 Insurance 3,900 3,000 -900 Wages 3,300 3,500 200 Gas and oil 2,700 3,100 400 Equipment depreciation 1,400 1,300 -100 Loss -17,500 -15,200 2,300

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