Question

Jake’s Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair-Hour Wages and salaries $ 20,500 $ 15.00 Parts and supplies $ 7.50 Equipment depreciation $ 2,740 $ 0.40 Truck operating expenses $ 5,750 $ 1.60 Rent $ 4,670 Administrative expenses $ 3,840 $ 0.60 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 $46.00 per repair-hour. Required: Compute the company’s activity variances for May. (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.)

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

Answer-

Jake's Roof
Activity variances
For the month ended May 31
Particulars	Planning Budget	Flexible Budget	Activity Variances	Remark
	$	$	$
Repair hours	2500	2400
Sales Revenue	2500 hours*$46 per hour =$115000	2400 hours*$46 per hour =$110400	-4600	Unfavorable
Less:- Expenses
Wages & Salaries	$20500+(2500 hours*$15 per hour) =$58000	$20500+(2400 hours*$15 per hour) =$56500	1500	Favorable
Part & supplies	2500 hours*$7.50 per hour =$18750	2400 hours*$7.50 per hour =$18000	750	Favorable
Equipment depreciation	$2740+(2500 hours*$0.40 per hour) =$3740	$2740+(2400 hours*$0.40 per hour) =$3700	40	Favorable
Truck operating expenses	$5750+(2500 hours*$1.60 per hour) =$9750	$5750+(2400 hours*$1.60 per hour) =$9590	160	Favorable
Rent	$4670	$4670	0	None
Administrative expenses	$3840+(2500 hours*$0.60 per hour) =$5340	$3840+(2400 hours*$0.60 per hour) =$5280	60	Favorable
Total expenses	$100250	$97740	2510	Favorable
Net operating income	$14750	$12660	-2090	Unfavorable