Question

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:

	Fixed Component per Month			Variable Component per Job			Actual Total for February
Revenue				$	277		$	36,030
Technician wages	$	8,100					$	7,950
Mobile lab operating expenses	$	4,700		$	33		$	9,160
Office expenses	$	2,600		$	2		$	2,730
Advertising expenses	$	1,570					$	1,640
Insurance	$	2,870					$	2,870
Miscellaneous expenses	$	970		$	1		$	415

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $33 per job, and the actual mobile lab operating expenses for February were $9,160. The company expected to work 140 jobs in February, but actually worked 144 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (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.)

Answer 1

		Flexible budget performance report
			Actual	Revenue & spending		Flexible	Activity variance		Static budget
			budget	variance		budget
no of jobs			144			144			140
	Revenue		36,030	3,858	U	39888	1108	F	38780
less:Exoenses
	Technicial wages		7,950	150	F	8,100	0	N	8,100
mobile lab operating expense			9,160	292	F	9452	132	U	9320
office expense			2,730	158	F	2888	8	U	2880
advertising expense			1,640	70	U	1,570	0	N	1,570
insurance			2,870	0	N	2,870	0	N	2,870
miscellaneous expense			415	699	F	1,114	4	U	1,110
total expense			24,765	1,229	F	25,994	144	U	25,850
net operating income			11,265	2,629	U	13,894	964	F	12,930