Question

Abel Corporation uses customers served as its measure of activity. During February, the company budgeted for 36,400 customers, but actually served 27,600 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:

Revenue: $4.90q

Wages and salaries: $34,600 + $1.52q

Supplies: $0.92q

Insurance: $11,800

Miscellaneous expenses: $7,800 + $0.44q

The company reported the following actual results for February:

Revenue	$	147,800
Wages and salaries	$	69,400
Supplies	$	15,800
Insurance	$	11,800
Miscellaneous expense	$	24,700

Required:

Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U). (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

AbelCorporation
Flexible Budget performance report
		Actual results	Revenue and Spending Variances		Flexible Budget	Activity Variance		Planning Budget
Cusomer served	(q)	27,600			27,600			36,400
Revenue	($4.90 X q)	$ 1,47,800	$     12,560	F	1,35,240	$     43,120	U	1,78,360
Expenses:
Wages and Salaries	[$34600+ ($1.52 X q)]	$     69,400	$        7,152	F	$    76,552	$     13,376	F	$     89,928
Supplies	($0.92 X q)	$     15,800	$        9,592	F	$    25,392	$       8,096	F	$     33,488
Insurance	$                             11,800	$     11,800	$              0	None	$    11,800	$              0	None	$     11,800
Miscellaneous expense	[$7800 + ($0.44 X q)]	$     24,700	$        4,756	U	$    19,944	$       3,872	F	$     23,816
Total expense		$ 1,21,700	$     11,988	F	$1,33,688	$     25,344	F	$ 1,59,032
Net operating income		$     26,100	$     24,548	F	$      1,552	$     17,776	U	$     19,328

If it is helpful, please rate the answer and if any doubt arises let me know