Question
In: Accounting
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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 | $ | 278 | $ | 33,390 | |||||
| Technician wages | $ | 8,300 | $ | 8,150 | |||||
| Mobile lab operating expenses | $ | 4,900 | $ | 31 | $ | 8,770 | |||
| Office expenses | $ | 2,800 | $ | 4 | $ | 3,170 | |||
| Advertising expenses | $ | 1,600 | $ | 1,670 | |||||
| Insurance | $ | 2,860 | $ | 2,860 | |||||
| Miscellaneous expenses | $ | 970 | $ | 2 | $ | 535 | |||
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 $8,770. The company expected to work 130 jobs in February, but actually worked 136 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.)
Solutions
Expert Solution
Solution:
Airqual Test Corporation
Flexible Budget Performance Report
For the Month Ended February
| Planning budget | Activity variance | Flexible Budget | Revenue and spending variance | Actual results | |
| Jobs | 130 | 136 | 136 | ||
| Revenue (278) |
$36,140 (278 x130) |
1,668 F (36140-37808) |
$37,808 (136x278) |
4,418U (37808-33390) |
$33,390 |
|
Expenses: |
|||||
| Technician wages (8300) | 8,300 |
0 (8300-8300) |
8,300 |
150F (8300-8150) |
$8,150 |
|
Mobile lab operating expenses (4900 + 31q) |
$8,930 [4900+(31x130)] |
186 U (8930-9116) |
$9,116 [4900+(31x136) |
160F (9116-8770) |
$8,770 |
|
Office expenses (2800+4q) |
$3,320 [2800+(4x130)] |
24U (3320-3344) |
$3,344 [2800+(4x136)] |
174F (3344-3170) |
$3,170 |
|
Advertising expenses (1600) |
1,600 |
0 (1600-1600) |
1,600 |
70U (1600-1670) |
$1,670 |
| Insurance (2860) | 2,860 |
0 (2860-2860) |
2,860 |
0 (2860-2860) |
$2,860 |
|
Miscellaneous expenses (970+2q) |
$1,230 [970+(2x130)] |
12 U (1230-1242) |
$1,242 [970+(2x136)] |
707F (1242-535) |
$535 |
| Total expenses |
$26,240 (8300+8930+3320+1600+2860+1230) |
36 U (26240-26276) |
$26,462 (8300+9,116+3344+1600+2860+1242) |
1,121F (26276-25155) |
$25,155 |
| Net operating Income |
$9,900 (36140-26240) |
1,446 F (9900-11346) |
$11,346 (37808-26462) |
3,111U (11346-8235) |
$8,235 |
ekkarill92 answered 2 years agoRelated Solutions
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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 $ 276
$ 33,130 Technician wages $ 8,100 $ 7,950 Mobile lab operating
expenses $ 4,800 $ 31 $ 8,670 Office expenses $ 2,500 $ 4 $ 2,870
Advertising expenses $ 1,560 $ 1,630 Insurance $ 2,880 $ 2,880
Miscellaneous expenses $...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
278
$
27,830
Technician wages
$
8,300
$
8,150
Mobile lab operating expenses
$
4,700
$
34
$
8,280
Office expenses
$
2,600
$
3
$
2,780
Advertising expenses
$
1,590
$
1,660
Insurance
$
2,860
$
2,860
Miscellaneous expenses
$...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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 $ 276
$ 38,650 Technician wages $ 8,500 $ 8,350 Mobile lab operating
expenses $ 4,900 $ 33 $ 9,690 Office expenses $ 2,500 $ 2 $ 2,650
Advertising expenses $ 1,580 $ 1,650 Insurance $ 2,890 $ 2,890
Miscellaneous expenses $...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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 $ 8,200 $ 8,050 Mobile lab operating
expenses $ 4,700 $ 31 $ 8,260 Office expenses $ 2,700 $ 3 $ 2,910
Advertising expenses $ 1,550 $ 1,620 Insurance $ 2,870 $ 2,870
Miscellaneous expenses $...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
36,030
Technician wages
$
8,500
$
8,350
Mobile lab operating expenses
$
4,500
$
31
$
8,680
Office expenses
$
2,800
$
3
$
3,070
Advertising expenses
$
1,610
$
1,680
Insurance
$
2,880
$
2,880
Miscellaneous expenses
$...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
275
$
30,250
Technician wages
$
8,200
$
8,050
Mobile lab operating expenses
$
4,900
$
31
$
8,460
Office expenses
$
2,300
$
3
$
2,510
Advertising expenses
$
1,570
$
1,640
Insurance
$
2,850
$
2,850
Miscellaneous expenses
$...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
279
$
30,730
Technician wages
$
8,500
$
8,350
Mobile lab operating
expenses
$
4,800
$
32
$
8,480
Office expenses
$
2,800
$
2
$
2,890
Advertising expenses
$
1,600
$
1,670
Insurance
$
2,900
$
2,900
Miscellaneous expenses
$...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
279
$
33,520
Technician wages
$
8,500
$
8,350
Mobile lab operating expenses
$
4,800
$
31
$
8,670
Office expenses
$
2,500
$
2
$
2,610
Advertising expenses
$
1,620
$
1,690
Insurance
$
2,870
$
2,870
Miscellaneous expenses
$...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
279
$
39,100
Technician wages
$
8,200
$
8,050
Mobile lab operating
expenses
$
4,700
$
34
$
9,640
Office expenses
$
2,400
$
3
$
2,700
Advertising expenses
$
1,550
$
1,620
Insurance
$
2,860
$
2,860
Miscellaneous expenses
$...
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost...
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
$
279
$
36,310
Technician wages
$
8,600
$
8,450
Mobile lab operating expenses
$
4,700
$
31
$
8,880
Office expenses
$
2,400
$
2
$
2,530
Advertising expenses
$
1,560
$
1,630
Insurance
$
2,890
$
2,890
Miscellaneous expenses
$...
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