Question

6. What is Adger’s revenue variance 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.)

Required information [The following information applies to the questions displayed below.] Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: Fixed Element Variable Element per per Customer Month Served $ 6,100 $ 68,000 $ 1,500 $ 600 $ 47,000 Revenue Employee salaries and wages Travel expenses Other expenses Actual Total for May $ 223,500 $ 126,000 $ 20,400 $ 44,300 When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during May the company actually served 40 customers.

10. What amount of revenue would be included in Adger’s planning budget for May?

11. What amount of employee salaries and wages would be included in Adger’s planning budget for May?

13. What amount of other expenses would be included in Adger’s planning budget for May?

Answer 1

6) Revenue variance = (40*6100)-223500 = 20500 U

10) Revenue in planning budget = 35*6100 = 213500

11) Employee salaries and wages in planning budget = (1500*35+68000) = 120500

13) Other expense in planning budget = 47000