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 $ 277 $ 36,030 Technician wages $ 8,500 $ 8,350 Mobile lab operating expenses $ 4,700 $ 31 $ 8,880 Office expenses $ 2,700 $ 3 $ 2,970 Advertising expenses $ 1,560 $ 1,630 Insurance $ 2,860 $ 2,860 Miscellaneous expenses $ 950 $ 1 $ 395 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $31 per job, and the actual mobile lab operating expenses for February were $8,880. The company expected to work 140 jobs in February, but actually worked 144 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.) This is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button.Next Visit question mapQuestion 8 of 8 Total

Answer 1

Complete the flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February.

AirQual Test Corporation
Flexible Budget Performance Report
For the Month Ended February 28
	Actual Results (144 Jobs)	Revenue and Spending Variances [Actual - Flexible]		Flexible budget (144 Jobs)	Activity Variances [Flexible - Planning]		Planning budget (140 jobs)
Revenue (A)	$36,030	($3,858)	U	$39,888	$1,100	F	$38,788
Expenses:
Technician Wages	$8,350	($150)	F	$8,500	$0		$8,500
Mobile lab operating expenses	$8,880	($284)	F	$9,164	$124	U	$9,040
Office expenses	$2,970	($162)	F	$3,132	$12	U	$3,120
Advertising Expenses	$1,630	$70	U	$1,560	$0		$1,560
Insurance	$2,860	$0		$2,860	$0		$2,860
Miscellaneous expense	$395	($699)	F	$1,094	$4	U	$1,090
Total Expenses (B)	$25,085	($1,225)	F	$26,310	$140	U	$26,170
Net operating Income [A-B]	$10,945	($2,633)	U	$13,578	$960	F	$12,618

_____________________________________________________________________

Working as follows:

Flexible Budget
Sales revenue	144 jobs × $277	$39,888
	Fixed	Variable
Mobile lab operating expenses	$4,700	144 jobs × $31 = $4464	$9,164
Office expense	$2,700	144 jobs × $3 = $432	$3,132
Misc. expenses	$950	144 jobs × $1 = $144	$1,094
Planning Budget
Sales revenue	140 jobs × $277	$38,788
	Fixed	Variable
Mobile lab operating expenses	$4,700	140 jobs × $31 = $4340	$9,040
Office expense	$2,700	140 jobs × $3 = $420	$3,120
Misc. expenses	$950	140 jobs × $1 = $140	$1,090