Question

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

	Fixed Element per Month		Variable Element per Customer Served		Actual Total for May
Revenue			$	5,700	$	209,500
Employee salaries and wages	$	64,000	$	1,100	$	106,400
Travel expenses			$	560	$	19,000
Other expenses	$	43,000			$	40,700

When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during May the company actually served 40 customers 1.What net operating income would appear in Adger’s flexible budget for May? 2. What is Adger's revenue variance for May? Actual Results Revenue Variance Flexible Budget

3.

What is Adger’s employee salaries and wages spending variance for May? Actual Results Spending Variance Flexible Budget 4.What is Adgers travel expenses spending variance for May? Actual Results Spending Variance Flexible Budget 5. What is Adger's other expenses spending variance for May? Actual Results Spending Variance Flexible Budget 6. What amount of revenue would be inculded in Adger's planning budget for May? Revenue: Variable element per customer served Planned level of activity Amount in planning budget 7. What amount of employee salaries and wages would be inculded in Adger's planning budget for May? Employee salaries and wages: Variable element per customer served Planned activity Variable portion of the amount Fixed element per month Amount in planning budget $0 8. What amount of travel expenses would be inculded in Adger's planning budget for May? Travel expenses: Variable element per customer served Planned activity Amount in planning budget 9. What amount of other expenses would be included in Adger's planning budget for May? Amount of other expenses 10. What exctiving Variance would Adger report in May with respect to its revenue? Flexible Budget Activity Variance Planning Budget 11. What activity Variances would Adger report with respect to each of its expenses? Flexible Budget Activity Variance Planning Budget Employee salaries and wages Travel expenses Other expenses

Answer 1