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 38,000   37,000     Revenue (3.50q) $ 133,800 $ 129,500 $ 4,300 F   Expenses:      Wages and salaries ($23,700 + $1.27q) 71,960 70,690 1,270 U      Supplies ($0.67q) 22,290 24,790 2,500 F      Insurance ($5,600) 5,600 5,600 0      Miscellaneous expense ($4,600 + $.36q) 15,420 17,920 2,500 F      Total expense 115,270 119,000 3,730 F   Net operating income $ 18,530 $ 10,500 $ 8,030 F Required: 1. Prepare a report showing the company’s revenue and spending variances for December. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) CICCHETTI CORPORATION Revenue and Spending Variances For the Month Ended December 31 Actual Results Revenue and Spending Variances Flexible Budget Customers served 38,000 Revenue $133,800 Expenses: Wages and salaries 71,960 Supplies 22,290 Insurance 5,600 Miscellaneous expense 15,420 Total expense 115,270 0 Net operating income $18,530 $0

Answer 1

CICCHETTI CORPORATION Revenue and Spending Variances For the Month Ended December 31 Actual Results Revenue and Spending Variances Flexible Budget Customers served 38,000 38000 Revenue $133,800 800 Favorable 133000 Expenses: Wages and salaries 71,960 0 None 71960 Supplies 22,290 3170 Favorable 25460 Insurance 5,600 0 None 5600 Miscellaneous expense 15,420 2860 Favorable 18280 Total expense 115,270 6030 Favorable 121300 Net operating income $18,530 6830 Favorable $11700

CICCHETTI CORPORATION Revenue and Spending Variances For the Month Ended December 31 Actual Results Revenue and Spending Variances Flexible Budget Customers served 38,000 Revenue $133,800 Expenses: Wages and salaries 71,960 Supplies 22,290 Insurance 5,600 Miscellaneous expense 15,420 Total expense 115,270 0 Net operating income $18,530 $0