Question

Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost per Month $ 21,000 Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Administrative expenses Cost per Repair-Hour $15.00 $ 7.30 $ 0.45 $ 1.80 $ 2,780 $ 5,750 $ 4,640 $ 3,810 $ 0.40 For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2,700 repair-hours in May, but actually worked 2,600 repair-hours. The company expects its sales to be $51.00 per repair-hour. Required: Compute the company's activity variances for May. (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.) Jake's Roof Repair Activity Variances For the Month Ended May 31 Revenue Expenses: Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Administrative expenses Total expense Net operating income

Answer 1

Solution: Activity Variances flexible budget** Planning budget** 2600 1326001 2700 137700 5100U Repair hours Revenue Expenses: Wages and salaries Parts and supplies Equipment de preciation Truck operating expenses Rent Administrative expenses Total expenses Net operating income 60000 18980 3950 10430 4640 4850 102850 29750 61500 19710 3995 106101 4640 4890 105345 32355 1500 F 730 F 45 F 180 F O None 40 F 2495 F 2605 U **Working: fixed component variable component per job flexible budget Planning budget| c=a+b*2600 d=a+b*2700 51.00 132600 137700 21000 15.00 7.30 Revenue Expenses: Wages and salaries Parts and supplies Equipment de preciation Truck operating expenses Rent Administrative expenses Total expenses Net operating income 0.45 1.80 2780 5750 4640 3810 60000 18980 3950 10430 4640 4850 102850 29750 61500 19710 3995 10610 4640 4890 1053451 32355 0.40