Question

Varcoe Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 30,500 customers, but actually served 25,500 customers. Revenue is $3.81 per customer served. Wages and salaries are $34,200 per month plus $1.21 per customer served. Supplies are $0.51 per customer served. Insurance is $8,400 per month. Miscellaneous expenses are $6,500 per month plus $0.21 per customer served. Required: Prepare a report showing the company's activity variances for September. Indicate in each case whether the variance is 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). Input all amounts as positive values and enter any losses with a minus sign.)

Answer 1

Required: Prepare a report showing the company's activity variances for September. Varcoe Corporation Activity Variances For the Month Ended September 30 Flexible Planning Activity Variances Budget Budget Customers served 25,500 30,500 $97,155 $116.205 $19,050 U Revenue Expenses: Wages and salaries Supplies Insurance Miscellaneous expenses Total expense Net operating income 65,055 13,005 8,400 11,855 98,315 -$1,160 71,105 15,555 8,400 12,905 107,965 $8,240 6,050 F 2,550 F 0 None 1,050 F 9.650 F $9,400 U Explanation:

Varcoe Corporation Activity Variances For the Month Ended September 30 Flexible Budget Activity Variances Planning Budget 30,500 Customers served (9) 25,500 $97,155 $116,205 $19,050 U Revenue ($3.819) Expenses: Wages and salaries ($34,200 + $1.219) Supplies ($0.519) Insurance ($8,400) Miscellaneous ($6,500 + $0.219) Total expense Net operating income Planning Budget: Revenue = ($3.81 * 30,500) = $116,205 Wages and salaries = [$34,200 + ($1.21 * 30,500)] = $71,105 Supplies = ($0.51 * 30,500) = $15,555 Insurance = $8,400 Miscellaneous expenses = ($6,500 + ($0.21 x 30,500)] = $12,905 65,055 13,005 8,400 11,855 98,315 -$1,160 71,105 15,555 8,400 12,905 107,965 $8,240 6,050 F 2,550 F 0 None 1,050 F 9,650 F $9,400 U Flexible Budget: Revenue = ($3.81 x 25,500) = $97,155 Wages and salaries = [$34,200 + ($1.21 * 25,500)] = $65,055 Supplies = ($0.51 * 25,500) = $13,005 Insurance = $8,400 Miscellaneous expenses = ($6,500 + ($0.21 * 25,500)] = $11,855