6 rlion provwdes on sie air quelity testng services The company has provided the

Question

6 rlion provwdes on sie air quelity testng services The company has provided the follwing cost formulas and actual results for the month of February Sed conponene 0.35 points VarlableActual Tot Revenue Technician wages Mobile lab operating expensers Office expenses Advertising expenses Insurance Miscellaneous expenses s 33,130 % 7,950 S8,930 S 2,778 S 1,680 S 2,900 s 405 s 276 s 3,100 s 4,800 s 2.4 s 1,620 S 2.900 S 970 S 33 Book Prant ReferencosMisc The company uses the number of jobs as its mensure of activity For exomple mobile lab operating expenses should be $4,800 plus $33 per job, and the actual mobile lab operating expenses for February were $8,930. The company expected to work 130 jobs in February, but actually worked 138 jobs

Explanation / Answer

Flexible Static Fixed Variable budget budget component component no of jobs 138 130 Revenue 276 38088 35880 Technicial wages 8,100 8,100 8,100 mobile lab operating expense 4,800 33 9354 9090 office expense 2,400 4 2952 2920 advertising expense 1,610 1,610 1,610 insurance 2,900 2,900 2,900 miscellaneous expense 970 1 1108 1100 total expense 20780 38 26,024 25,720 Flexible budget = fixed component + 138 jobs *variable component Static budget    = Fixed component + 130 jobs *variable component Flexible budget performance report Actual Revenue & spending Flexible Activity variance Static budget budget variance budget no of jobs 138 138 130 Revenue 33,130 4,958 U 38088 2208 F 35880 less:Exoenses Technicial wages 7,950 150 F 8,100 0 N 8,100 mobile lab operating expense 8,930 424 F 9354 264 U 9090 office expense 2,770 182 F 2952 32 U 2920 advertising expense 1,680 70 U 1,610 0 N 1,610 insurance 2,900 0 N 2,900 0 N 2,900 miscellaneous expense 405 703 F 1,108 8 U 1,100 total expense 24,635 1,389 F 26,024 304 U 25,720 net operating income 8,495 3,569 U 12,064 1,904 F 10,160 Activity variance = Flxexible budget          - planned budget where   Flexible budget = fixed cost per month + 8,200*cost per car washed Planned budget = fixed cost per month +8,100*cost per cash washed fixed cost cost per 8,200 8,100 per monht car washed Flexible planned Activity variance Cars washed 8,200 8,100 Revenue 6.7 54940 54270 670 F Expenses Cleaning supplies 0.6 4920 4860 60 U Electricity 1,400 0.07 1974 1967 7 U Maintenance 0.3 2460 2430 30 U Wages and salaries 4,500 0.4 7780 7740 40 U Depreciation 8,500 8,500 8,500 0 N Rent 2,000 2,000 2,000 0 N Administrative expenses 1,700 0.02 1,864 1,862 2 N total expense 18100 1.39 29498 29359 139 U net operating income 25442 24911 531 F

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