Question

irQual 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 $ 30,490 Technician wages $ 8,500 $ 8,350 Mobile lab operating expenses $ 4,700 $ 33 $ 8,500 Office expenses $ 2,300 $ 4 $ 2,630 Advertising expenses $ 1,550 $ 1,620 Insurance $ 2,880 $ 2,880 Miscellaneous expenses $ 960 $ 1 $ 385 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 $8,500. The company expected to work 120 jobs in February, but actually worked 124 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

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Jobs	124			124			120
Revenue	30490	3858	U	34348	1108	F	33240
Expenses:
Technician wages	8350	150	F	8500	0	None	8500
Mobile lab operating expenses	8500	292	F	8792	132	U	8660
Office expenses	2630	166	F	2796	16	U	2780
Advertising expenses	1620	70	U	1550	0	None	1550
Insurance	2880	0	None	2880	0	None	2880
Miscellaneous expenses	385	699	F	1084	4	U	1080
Total expense	24365	1237	F	25602	152	U	25450
Net operating income	6125	2621	U	8746	956	F	7790