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: Actual Total Component per Job for February Variable $280 $ 30 Fixed Component per Month Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses 串 8,600 串 4,700 $ 2,800 $ 1,560 $ 2,890 $ 950 33,650 8,450 8,440 3,040 1,630 2,890 $385 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $30 per job, and the actual mobile lab operating expenses for February were $8,440. The company expected to work 130 jobs in February, but actually worked 138 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.)

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Solution: Flexible Budget Performance Report For the month ending Feb. 28 Particulars obs Spending Variance Activitiy Variance Actual Variance F/U Flexi Budget Variance F/U Budget 130 138 138 $33,650 4,90U$ 38,640 $ 2,240 F $36,400 Revenue (280 138 and 130) Expenses Technician wages Mobile lab operating expenses (4700)+(30 *jobs) S 8,440$ Office Expenses (2800)+(3"jobs) Advertising expenses Insurance Misc. Expenses (950)+1 jobs Total Expenses Net Operating Income $ 8,450$ $ 8,600$ 150 400 174 3,040 S $1,630 S $ 2,890 S $ 385 $ $24,835 S 1 $ 8,815 $ 3 None $ 8,600 $8,840$ 240 U $ 8,600 $3,214$24 U $ 3,190 None$ 1,560 None $ 2,890 U 1,080 $26,192$ 272 U $25,920 $10,480 70 1,560 None $2,890 $ $1,088 8 703 1,357 3,633 12,448 1,968 F