Adger Corporation is a service company that measures its output based on the num

Question

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

When preparing its planning budget the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 customers.

What is Adger’s revenue variance 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.)

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

Actual Resuts Spending VarianceF Actual Results Spending Variance Flexible Budget

Explanation / Answer

5. Calculation of operating income to appear in flexi budget:

6. Revenue variance = Actual revenue - budgeted revenue

= 170000 - 182000

= $12000 U

7. Budgeted employees salaries & wages = 51000+ (1200*35)

= $93000

Employess salaries & wages spending variance = Budgeted cost - Actual cost

= 93000 - 92700

= $300 F

Total Standard Variable expense per customer served 1850 No. of customers served 35 Total standard variable cost 64750 Add: Fixeed cost 81000 Total budgeted cost 145750 Revnue (35*5200) 182000 Net operating revnue 36250

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