Question

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

	Fixed Cost per Month			Cost per Repair-Hour
Wages and salaries	$	20,800		$	15.00
Parts and supplies				$	7.10
Equipment depreciation	$	2,770		$	0.35
Truck operating expenses	$	5,740		$	1.60
Rent	$	4,600
Administrative expenses	$	3,840		$	0.50

For example, wages and salaries should be $20,800 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 $50.00 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.)

Answer 1

Answer-

Jake's Roof
Activity variances
For the month ended May 31
Particulars	Planning Budget	Flexible Budget	Activity Variances	Remark
	$	$	$
Repair hours	2600	2500
Sales Revenue	2600 hours*$50 per hour =$130000	2500 hours*$50 per hour =$125000	-5000	Unfavorable
Less:- Expenses
Wages & Salaries	$20800+(2600 hours*$15 per hour) =$59800	$20800+(2500 hours*$15 per hour) =$58300	1500	Favorable
Part & supplies	2600 hours*$7.10 per hour =$18460	2500 hours*$7.10 per hour =$17750	710	Favorable
Equipment depreciation	$2770+(2600 hours*$0.35 per hour) =$3680	$2770+(2500 hours*$0.35 per hour) =$3645	35	Favorable
Truck operating expenses	$5740+(2600 hours*$1.60 per hour) =$9900	$5740+(2500 hours*$1.60 per hour) =$9740	160	Favorable
Rent	$4600	$4600	0	None
Administrative expenses	$3840+(2600 hours*$0.50 per hour) =$5140	$3840+(2500 hours*$0.50 per hour) =$5090	50	Favorable
Total expenses	101580	99125	2455	Favorable
Net operating income	28420	25875	-2545	Unfavorable