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 $ 275 $ 30,250 Technician wages $ 8,100 $ 7,950 Mobile lab operating expenses $ 4,500 $ 34 $ 8,420 Office expenses $ 2,600 $ 3 $ 2,810 Advertising expenses $ 1,580 $ 1,650 Insurance $ 2,880 $ 2,880 Miscellaneous expenses $ 920 $ 2 $ 465 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,500 plus $34 per job, and the actual mobile lab operating expenses for February were $8,420. The company expected to work 120 jobs in February, but actually worked 128 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

AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Revenue and Flexible Activity Planning Actual Results Spending Variances Budget Variances Budget 128 128 30250 3858 U 35200 1108 F 33000 120 Jobs (9) Revenue ($275.00) Expenses: Technician wages ($8,100) Mobile lab operating expenses ($4,500 + $34.00) Office expenses ($2,600 + $3.009) Advertising expenses ($1,580) Insurance ($2,880) Miscellaneous expenses ($920 + $2.009) Total expense Net operating income 7950 8420 2810 1650 2880 465 150 F 280 F 162 F 70 U None 699 F 1221 F 2637 U 8100 8852 2984 1580 2880 1176 25572 9628 None 120 U 12 U None None 4U 136 U 972 F 8100 8580 2960 1580 2880 1160 25260 7740 24175 6075

1 AirQual Test Corporation 3 Flexible Budget Performance Report 4 For the Month Ended February 28 5 6 Activity Variances Actual Results Revenue and Flexible Spending Variances Budget =B7 3858 U =D7*275 Planning Budget 120 =F7*275 128 30250 1108 F 7 Jobs (9) 8 Revenue ($275.00q) 9 Expenses: 10 Technician wages ($8,100) 11 Mobile lab operating expenses ($4,500 + $34.009) 12 Office expenses ($2,600 + $3.000) 13 Advertising expenses ($1,580) 14 Insurance ($2,880) 15 Miscellaneous expenses ($920 + $2.00) 16 Total expense 17 Net operating income 7950 8420 2810 1650 2880 465 ESUM(B10:B15) =B8-B16 150 F 280 F 162 F 70 U None 699 F 1221 F 2637 U 8100 =4500+(34*D7) =2600+(38D7) 1580 2880 =920+(2*D7) =SUM(D10:D15) =D8-D16 None 120 U 12U None None 4U 136 U 972 F 8100 =4500+(34*F7) =2600+(3*F7) 1580 2880 =920+(2*F7) =SUM(F10:F15) =F8-F16