Question

Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December: Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 Actual Results Planning Budget Variances Customers served 34,000 29,500 Revenue ($4.8q) $ 164,000 $ 141,600 $ 22,400 F Expenses: Wages and salaries ($37,100 + $1.6q) 94,600 84,300 10,300 U Supplies ($0.6q) 20,000 17,700 2,300 U Insurance ($14,100) 14,350 14,100 250 U Miscellaneous expense ($7,100 + $0.4q) 22,450 18,900 3,550 U Total expense 151,400 135,000 16,400 U Net operating income $ 12,600 $ 6,600 $ 6,000 F

Prepare the company's flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or "None".

Answer 1

Solution:

Cicchetti Corporation
Flexible Budget Performance Report
For the month ended December 31
Particulars	Actual results	Revenue and spending variances		Flexible Budget	Activity Variances		Planning Budget
Customers served	34000			34000			29500
Revenue	$164,000.00	$800.00	F	$163,200.00	$21,600.00	F	$141,600.00
Expenses:
Wages & Salaries	$94,600.00	$3,100.00	U	$91,500.00	$7,200.00	U	$84,300.00
Supplies	$20,000.00	$400.00	F	$20,400.00	$2,700.00	U	$17,700.00
Insurance	$14,350.00	$250.00	U	$14,100.00	$0.00	None	$14,100.00
Miscellaneous expense	$22,450.00	$1,750.00	U	$20,700.00	$1,800.00	U	$18,900.00
Total expense	$151,400.00	$4,700.00	U	$146,700.00	$11,700.00	U	$135,000.00
Net Operating Income	$12,600.00	$3,900.00	U	$16,500.00	$9,900.00	F	$6,600.00