Question

Exercise 9-8 (Algo) Flexible Budgets and Activity Variances [LO9-1, LO9-2] Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost per Month $ 20,800 Wages and balaries Parts and supplies Equipment depreciation Truck operating expenses Rent Administrative expenses Cont per Repair-Hour $15.00 $ 7.70 $ 0.50 $ 1.60 $ 2,790 $5,740 $ 4,670 $ 3,830 $ 0.70 For example, wages and salaries should be $20,800 plus $15.00 per repair-hour. The company expected to work 3,000 repair-hours in May, but actually worked 2,900 repair-hours. The company expects its sales to be $45.00 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

Activity variance

Revenue (3000-2900)*45	4500 U
Expense
Wages and salaries (3000-2900)*15	1500 F
parts and supplies	770 F
Equipment depreciation	50 F
Truck operating expenses	160 F
Rent	0 None
Administrative expenses	70 F
Total expense	2550 F
Net operating income	1950 U