Schriever Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.
Fixed element per month | Variable Element per Well Serviced | ||||
Revenue | $ | 4,500 | |||
Employee salaries and wages | $ | 57,200 | $ | 1,100 | |
Servicing materials | $ | 600 | |||
Other expenses | $ | 31,000 | |||
The planning budget for May was based on 36 wells serviced, but a total of 31 wells were actually serviced in May.
The activity variance for “Employee salaries and wages” for May would have been closest to:
Multiple Choice
$5,500 F
$7,500 F
$5,500 U
$7,500 U
Activity variance for employee salaries and Wages
= Budgeted - Actual
= [(36*1100)+57200] - [(31*1100)+57200]
= 96,800 - 91,300
= 5500 F
Schriever Corporation is an oil well service company that measures its output by the number of...
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Rients Corporation is a service company that measures its output
by the number of customers served. The company has provided the
following fixed and variable cost estimates that it uses for
budgeting purposes and the actual results of operations for
October.
A. 600 F
B. 600 U
C. 9400 F
D. 9400 U
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