Question

Jake’s Roof Repair has provided the following data concerning its costs:

	Fixed Cost per Month			Cost per Repair-Hour
Wages and salaries	$	21,100		$	15.00
Parts and supplies				$	7.10
Equipment depreciation	$	2,740		$	0.40
Truck operating expenses	$	5,710		$	1.60
Rent	$	4,620
Administrative expenses	$	3,880		$	0.60

For example, wages and salaries should be $21,100 plus $15.00 per repair-hour. The company expected to work 2,600 repair-hours in May, but actually worked 2,500 repair-hours. The company expects its sales to be $53.00 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	Flexible Budget	Planning Budget	Activity Variances	Remark
	$	$	$
Repair hours	2500	2600
Sales Revenue	2500 hours*$53 per hour =$132500	2600 hours*$53 per hour =$137800	-5300	Unfavorable
Less:- Expenses
Wages & Salaries	$21100+(2500 hours*$15 per hour) =$58600	$21100+(2600 hours*$15 per hour) =$60100	1500	Favorable
Part & supplies	2500 hours*$7.10 per hour =$17750	2600 hours*$7.10 per hour =$18460	710	Favorable
Equipment depreciation	$2740+(2500 hours*$0.40 per hour) =$3740	$2740+(2600 hours*$0.40 per hour) =$3780	40	Favorable
Truck operating expenses	$5710+(2500 hours*$1.60 per hour) =$9710	$5710+(2600 hours*$1.60 per hour) =$9870	160	Favorable
Rent	$4620	$4620	0	None
Administrative expenses	$3880+(2500 hours*$0.60 per hour) =$5380	$3880+(2600 hours*$0.60 per hour) =$5440	60	Favorable
Total expenses	99800	102270	2470	Favorable
Net operating income	32700	35530	-2830	Unfavorable