Question

Required information [The following information applies to the questions displayed below Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: Fixed Element Variable Element Actual Total for May $ 217,000 $128,100 $35,300 $ 34,400 per Customer per Month Served Revenue $5,800 $1,800 Employee salaries and wages Travel expenses Other expenses $57,000 950 $36,000 When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during May the company actually served 40 customers.

Answer 1

1) Revenue in flexible budget = 5800*35 = 202000

2) Employee salaries and wages in Flexible budget = (1800*35+57000) = 120000

3) Travel expense in Flexible budget = (950*35) = 33250

4) Other expense in Flexible budget = 36000

5) Net operating income = 12750

6) Revenue variance = (40*5800)-217000 = 15000 U