Question

AirQual 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 Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses $ 6,400 $ 2,900 $ 2,600 $ 970 $ 1,680 $ See Variable Actual Total Component per Job for February $360 $ 18,950 $ 6,450 $ 35 $ 4,530 $ 2 $ 3,50 $ 995 $ 1,680 $ 465 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $2,900 plus $35 per job, and the actual mobile lab operating expenses for February were $4,530. The company expected to work 50 jobs in February, but actually worked 52 jobs. Required: Prepare a flexible budget performance report showing Air Qual 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.) AirQual Test Corporation < Prev 2 of 2 Next > 5:08 PM search O LO 9 w e 11/2/2019

Answer 1

AirQual Test Corporation
Flexible Budget Performance Report
For the Month Ended February 28
	Actual Results	Revenue and Spending Variance				Flexible Budget	Activity Variance			Planning Budget
Jobs	52					52				50
Revenue	$18950	(18720-18950)= 230			F	($360*52)= $18720	(18000-18720)= 720		F	($360*50)= $18000
Expenses:
Technician wages	6450	(6400-6450)= 50			U	6400	0		NONE	6400
Mobile lab operating expenses	4530	(4720-4530)= 190			F	($2900+$35*52)= 4720	(4650-4720)= 70		U	($2900+$35*50)= 4650
Office expenses	3050	(2704-3050)= 346			U	($2600+$2*52)= 2704	(2700-2704)= 4		U	($2600+$2*50)= 2700
Advertising expenses	995	(970-995)= 25			U	970	0		NONE	970
Insurance	1680	0			NONE	1680	0		NONE	1680
Miscellaneous expenses	465	(656-465)= 191			F	($500+$3*52)= 656	(650-656)= 6		U	($500+$3*50)= 650
Total expense	$17170	40			U	$17130	80		U	$17050
Net operating income	$1780	190			F	$1590	640		F	$950