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			Variable Component per Job			Actual Total for February
Revenue				$	276		$	27,610
Technician wages	$	8,600					$	8,450
Mobile lab operating expenses	$	4,800		$	33		$	8,270
Office expenses	$	2,600		$	3		$	2,780
Advertising expenses	$	1,590					$	1,660
Insurance	$	2,870					$	2,870
Miscellaneous expenses	$	950		$	1		$	365

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $33 per job, and the actual mobile lab operating expenses for February were $8,270. The company expected to work 110 jobs in February, but actually worked 116 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

fixed variable flexible static cost component budgetbudget Number of iobs revenue technical wages mobile lab operating expenses office expenses advertising expenses insurance miscellaneous expenses 116 32016 8600 8628 110 30360 8600 8430 2930 1590 2870 1060 276 8600 4800 2600 1590 2870 950 1590 2870 1066 flexible |spending/revenue budget static Volume variances actual budget variances Number of iobs 110 30360 116 32016 116 27610 1656 F 4406U revenue technical wages mobile lab operating expenses office expenses advertising expenses insurance miscellaneous expenses total expneses 8600 8430 2930 1590 2870 1060 0 None 8600 8628 2948 1590 2870 1066 25702 150 F 358 F 168 F -70 U 8450 8270 2780 1660 2870 365 24395 198 U 18 U 0 None 0 None 0 None 701 F 1307 F 222 U 3099 U 1434 F operating income 4880 6314 3215