Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 36,600 customers, but actually served 27,400 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:
The company reported the following actual results for February:
Revenue |
$ |
151,800 |
|
|
Wages and salaries |
$ |
69,600 |
|
|
Supplies |
$ |
16,000 |
|
|
Insurance |
$ |
12,000 |
|
|
Miscellaneous expense |
$ |
25,700 |
|
|
Required:
Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U). Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
Fomat Example:
Arrasmith Corporation Flexible Budget Performance Report
Forthe Month Ended February 28
|
Actual Results |
Revenue and Spending Variances |
Flexible Budget |
Activity Variances |
Planning Budget |
Customers served |
27,400 |
|
27,400 |
|
36,600 |
Revenue |
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Expenses: |
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Wages and salaries |
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Supplies |
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Insurance |
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Miscellaneous expense |
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Total expense |
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Net operating income |
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Please show process.
Actual Result | Revenue and Spending Variance | Flexible Budget | Planning Budget | |
Customer Served | 27400 | None | 27400 | 36600 |
revenue | 151800 | F | 139740 | 186660 |
Expenses: | ||||
Wages & Salary | 69600 | F | 78092 | 92628 |
Supplies | 16000 | F | 26852 | 35868 |
Insurance | 12000 | NONE | 12000 | 12000 |
Misc. Expenses | 25700 | U | 20604 | 24836 |
Total expenses | 123300 | F | 137548 | 165332 |
net operating income | 28500 | F | 2192 | 21328 |
Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for...
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Varriano Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 48,000 customers, but actually served 49,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Fixed element per month Variable element per customer Revenue - $ 3.86 Wages and salaries $ 38,200 $ 1.33 Supplies $ 0 $ 0.63 Insurance $ 8,700 $ 0.00 Miscellaneous expense $ 8,200 $ 0.53 Prepare a report showing the...
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