Question

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

Fixed Cost per Month Cost per Repair-Hour Wages and salaries $ 21,200 $ 16.00 Parts and supplies $ 7.60 Equipment depreciation $ 2,710 $ 0.50 Truck operating expenses $ 5,760 $ 1.70 Rent $ 4,690 Administrative expenses $ 3,850 $ 0.50 For example, wages and salaries should be $21,200 plus $16.00 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 $48.00 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

Solution:

Jake's Roof Repair
Activity Variances
For the month ended May 31
Particulars	Flexible Budget	Planning Budget	Variances	Fav. / Unfav.
Repair Hours	2500	2600
Revenue	$1,20,000.00	$1,24,800.00	$4,800.00	U
Expenses:
Wages and Salaries	$61,200.00	$62,800.00	$1,600.00	F
Parts and supplies	$19,000.00	$19,760.00	$760.00	F
Equipment Depreciation	$3,960.00	$4,010.00	$50.00	F
Truck operating expenses	$10,010.00	$10,180.00	$170.00	F
Rent	$4,690.00	$4,690.00	$0.00	None
Administrative Expenses	$5,100.00	$5,150.00	$50.00	F
Total Expenses	$1,03,960.00	$1,06,590.00	$2,630.00	F
Net Operating Income	$16,040.00	$18,210.00	$2,170.00	U