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				$	277		$	30,490
Technician wages	$	8,300					$	8,150
Mobile lab operating expenses	$	4,900		$	31		$	8,460
Office expenses	$	2,300		$	4		$	2,630
Advertising expenses	$	1,610					$	1,680
Insurance	$	2,870					$	2,870
Miscellaneous expenses	$	930		$	2		$	475

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $31 per job, and the actual mobile lab operating expenses for February were $8,460. The company expected to work 120 jobs in February, but actually worked 122 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

	Actual results	Revenue and spending variances		Flexible budget	Activity variances		Planning budget
Jobs	122			122			120
Revenue	30490	3304	U	33794	554	F	33240
Expenses:
Technician wages	8150	150	F	8300	0	None	8300
Mobile lab operating expenses	8460	222	F	8682	62	U	8620
Office expenses	2630	158	F	2788	8	U	2780
Advertising expenses	1680	70	U	1610	0	None	1610
Insurance	2870	0	None	2870	0	None	2870
Miscellaneous expenses	475	699	F	1174	4	U	1170
Total expense	24265	1159	F	25424	74	U	25350
Net operating income	6225	2145	U	8370	480	F	7890