Question

Varriano Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 48,000 customers, but actually served 49,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting:

	Fixed element per month			Variable element per customer
Revenue		-		$	3.86
Wages and salaries	$	38,200		$	1.33
Supplies	$	0		$	0.63
Insurance	$	8,700		$	0.00
Miscellaneous expense	$	8,200		$	0.53

Prepare a report showing the company's activity variances for October. Indicate in each case whether the variance is favorable (F) or unfavorable (U). (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.)

	Varriano Corporation Activity Variances For the Month Ended October 31 Flexible Budget Planning Budget Activity Variances Customers served 49,000 48,000 Revenue Expenses: Wages and salaries Supplies Insurance Miscellaneous expense Total expense Net operating income

Answer 1

Answer-

VARRIANO CORPORATION
Activity Variance
For the month ended October 31
Particulars	Planning Budget	Flexible Budget	Variances	Remark
	$	$	$
Revenue	48000 customers served*$3.86 per customer= 185280	49000 customers served*$3.86 per customer= 189140	3860	Favorable
Less:-Expenses
Wages & salaries	$38200+(48000 customers served*$1.33 per customer)= 102040	$38200+(49000 customers served*$1.33 per customer)= 103370	-1330	Unfavorable
Supplies	48000 customers served*$0.63 per customer= 30240	49000 customers served*$0.63 per customer= 30870	-630	Unfavorable
Insurance	8700	8700	0	None
Miscellaneous expense	$8200+(48000 customers served*$0.53 per customer)= 33640	$8200+(49000 customers served*$0.53 per customer)= 34170	-530	Unfavorable
Total Expenses	174620	177110	-2490	Unfavorable
Income from operations	10660	12030	1370	Favorable