Adger Corporation is a service company that measures its output based on the num

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 40 customers per month; however, during May the company actually served 45 customers.

A. What is Adger’s other expenses spending variance for May?

B. What amount of revenue would be included in Adger’s planning budget for May?

C. What amount of employee salaries and wages would be included in Adger’s planning budget for May?

D.  What amount of travel expenses would be included in Adger’s planning budget for May?

Fixed Element Variable Element Actual per Customer Served $ 5,400 $ 2,200 $ 530 Total for Mayy $ 226,000 $ 158,700 $ 20,700 $ 38,000 per Revenue Employee salaries and wages Travel expenses Other expenses Month $61,000 $ 40,000

Explanation / Answer

a Adger’s other expenses spending variance for May=40000-38000 = $2000 F b Revenue in planning budget for May=5400*40= 216000 c Employee salaries and wages in planning budget =61000+(2200*40)= 149000 d Travel expenses in planning budget=530*40= 21200

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