Question

Jake's Roof Repair has provided the following data concerning its costs:

Jake's Roof Repair has provided the following data concerning its costs Fixed Cost Cost per per Month $ 20,500 Repair-Hour $15.0e $ 7.80 $ e.45 $ 1.60 Mages and salaries Parts and supplies Equipment depreciation Truck operating expenses $ 2,700 $ 5,700 $ 4,610 $ 3,880 Rent Administrative expenses s 0.se For example, wages and salaries should be $20,500 plus $15.00 per repair-hour. The company expected to work 2,500 repair-hours in May, but actually worked 2,400 repair-hours. The company expects its sales to be $50.00 per repair-hour Required: Compute the company's activity variances for May. (Indicate the effect of each veriance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (Le, zero variance). Input all amounts as positive velues) 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

Ans. 1	JAKE'S ROOF REPAIR
	Activity   Variance
	For the Month Ended MAY 31
		Flexible Budget	Activity variance		Planning Budget
	Repair hours	2400			2500
	Revenues	$120,000	$5,000	U	$125,000
	Expenses
	Wages and salaries	$56,500	$1,500	F	$58,000
	Parts and supplies	$18,720	$780	F	$19,500
	Equipment depreciation	$3,780	$45	F	$3,825
	Truck operating expenses	$9,540	$160	F	$9,700
	Rent	$4,610	$0	none	$4,610
	Administrative expenses	$5,080	$50	F	$5,130
	Total expenses	$98,230	$2,535	F	$100,765
	Net operating income	$21,770	$2,465	U	$24,235
	Activity variance =   Flexible budget - Planning budget
	*Calculations for Flexible budget & Planning budget:
			Flexible budget		Planning budget
	Repair hours		2,400		2,500
	Revenues		2,400 * $50		2,500 * $50
	Expenses
	Wages and salaries		$20,500 + ($15 * 2,400)		$20,500 + ($15 * 2,500)
	Parts and supplies		2,400 * $7.80		2,500 * $7.80
	Equipment depreciation		$2,700 + ($0.45 * 2,400)		$2,700 + ($0.45 * 2,500)
	Truck operating expenses		$5,700 + ($1.60 * 2,400)		$5,700 + ($1.60 * 2,500)
	Rent		$4,610		$4,610
	Administrative expenses		$3,880 + ($0.50 * 2,400)		$3,880 + ($0.50 * 2,500)
	*Flexible budget is prepared on the basis of actual units.
	*Fixed expenses remain same as master budget.
	Activity variance =   Flexible budget - Planning budget
	*Increase in expenses & decrease in revenue or net income from Planning budget to flexible budget =   Unfavorable.
	*Decrease in expenses & increase in revenue or net income from Planning budget to flexible budget =   Favorable.