Crovo Corporation uses customers served as its measure of activity. During Decem

Question

Crovo Corporation uses customers served as its measure of activity. During December, the company budgeted for 38,000 customers, but actually served 40,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Variable element per customer $2.60 $0.80 $0.50 S0.00 S0.30 Fixed element per month Revenue Wages and salari.. Supplies Insurance Miscellaneous. .S20,300 S0 $7,500 S3,700 Actual results for December. Revenue Wages and salaries Supplies Insurance Miscellaneou S101,500 S52,000 S18,100 S9,400 S18,100 Required: Prepare a report showing the company's revenue and spending variances for December. Label each variance as favorable (F or unfavorable (U) TTT Paragraph Arial 3 (12pt) T.

Explanation / Answer

Answer:-

Flexible Budget Performance Report For the month ended December Particulars Flexible Budget Actual Results Variances Remark $ $ $ Revenue 40000 customer*$2.60 per customer 104000 101500 -2500 Unfavourable Less:- Variable portion expenses Wages & salaries (40000 customer*$.80 per customer)-20300 11700 31700 -20000 Unfavourable Supplies 40000 customer*$.50 per customer 20000 18100 1900 Favourable Miscellenous (40000 customer*$.30 per customer)-3700 8300 14400 -6100 Unfavourable Less: Fixed portion Expenses Wages & salaries 20300 20300 0 No variance Insurance 7500 9400 -1900 Unfavourable Miscellenous 3700 3700 0 No variance Income from opreations 32500 3900 -28600 Unfavourable

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