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Tajiri Corporation uses customers served as its measure of activity. The followi

ID: 2463319 • Letter: T

Question

Tajiri Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of May:



Prepare the company's flexible budget performance report for May. Label each variance as favorable (F) or unfavorable (U). (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)


Tajiri Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of May:

Explanation / Answer

Solution :

Planning Budget

*Activity Variances

***Flexible Budget

**Revenue and Spending Variances

Actual Results

   Customers served

     44,000

     45,000

     45,000

   Revenue

   154,000

   3,500

F

   157,500

                         300

U

   157,200

   Expenses:

   Wages and salaries

     83,360

   1,340

U

     84,700

                             -  

NONE

     84,700

   Supplies

     32,560

      740

U

     33,300

                      2,440

F

     30,860

   Insurance

       6,300

          -  

NONE

       6,300

                             -  

NONE

       6,300

   Miscellaneous expense

     24,220

      430

U

     24,650

                      2,130

F

     22,520

   Total expense

   146,440

   2,510

U

   148,950

                      4,570

F

   144,380

   Net operating income

       7,560

      990

F

       8,550

                      4,270

F

     12,820

***Flexible Budget

  Customers served

45000

  Revenue (3.50q*45000)

157500

  Expenses:

     Wages and salaries ($24,400 + $1.34q*45000)

84700

     Supplies ($0.74q*45000)

33300

     Insurance

6300

     Miscellaneous expense ($5,300 + $.43q*45000)

24650

     Total expense

148950

  Net operating income

8550

*Activity Variances =Flexible Budget - Planning budget

**Revenue and Spending Variances= Flexible budget - actual results

Planning Budget

*Activity Variances

***Flexible Budget

**Revenue and Spending Variances

Actual Results

   Customers served

     44,000

     45,000

     45,000

   Revenue

   154,000

   3,500

F

   157,500

                         300

U

   157,200

   Expenses:

   Wages and salaries

     83,360

   1,340

U

     84,700

                             -  

NONE

     84,700

   Supplies

     32,560

      740

U

     33,300

                      2,440

F

     30,860

   Insurance

       6,300

          -  

NONE

       6,300

                             -  

NONE

       6,300

   Miscellaneous expense

     24,220

      430

U

     24,650

                      2,130

F

     22,520

   Total expense

   146,440

   2,510

U

   148,950

                      4,570

F

   144,380

   Net operating income

       7,560

      990

F

       8,550

                      4,270

F

     12,820