Question

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 $ 950 $ 2 $ 555 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $33 per job, and the actual mobile lab operating expenses for February were $9,690. The company expected to work 150 jobs in February, but actually worked 160 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.)

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.)

	AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Actual Results Flexible Budget Planning Budget Jobs 160 Revenue $38,650 Expenses: Technician wages 8,350 Mobile lab operating expenses 9,690 Office expenses 2,650 Advertising expenses 1,650 Insurance 2,890 Miscellaneous expenses 555 Total expense 25,785 Net operating income $12,865

Answer 1

Solution: