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ile Edit View History Bookmarks Window Help newconnect.mheducation.com picsl layout I Marshal University Banner Ex Marsha Connect AirQual Test Co Exam 2 6 Help Save& Exit Submi Saved uirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and ctual results for the month of February Variable Pixed Component Component per Actual Total Job $276 for rebruary s 30,370 B,3s0 8,520 2.730 per Month Revenue Technieian wagen Nobile lab operating expenses office expenses Advertiaing expenses Inaurance Miscellaneous expenses s 4.600 s 2.400 s 1.610 2,870 S 960 s 34 S 1,68 s 2,870 505 he company uses the number of jobs as its measure of activity, For example, mobile lab operating expenses should be $4,600 plus 34 per job, and the actual mobile lab operating expenses for February were $8,520. The company expected to work 120 jobs in ebruary, but actually worked 128 jobs. equired: repare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity ariances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no ffect (i.e., zero variance). Input all amounts as positive values) AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 20 C Prev 12 of 17 lI NextExplanation / Answer
Ans. AirQual Test Corporation Flexible budget Performance Report For the Month Ended February 28 Actual Revenue and Flexible Activity Variances Planning Results Spending Variances Budget Budget Jobs 128 128 120 Revenue 30370 4958 U 35328 2208 F 33120 Expenses: 0 0 Technician wages 8350 150 F 8500 0 no effect 8500 Mobile lab operating exp. 8520 432 F 8952 272 U 8680 Office expenses 2730 182 F 2912 32 U 2880 Advertising expenses 1680 70 U 1610 0 no effect 1610 Insurance 2870 0 no effect 2870 0 no effect 2870 Miscellaneous expenses 505 711 F 1216 16 U 1200 Total expenses 24655 1405 F 26060 320 U 25740 Net Operating Income 5715 3553 U 9268 1888 F 7380 *Working notes: Actual Revenue and Flexible Activity Variances Planning Results Spending Variances Budget Budget Jobs 128 128 120 Revenue 30370 4958 U 35328 -2208 F 33120 Expenses: 0 0 Technician wages 8350 150 F 8500 0 8500 Mobile lab operating exp. 8520 432 F 8952 -272 U 8680 Office expenses 2730 182 F 2912 -32 U 2880 Advertising expenses 1680 -70 U 1610 0 1610 Insurance 2870 0 no effect 2870 0 2870 Miscellaneous expenses 505 711 F 1216 -16 U 1200 Total expenses 24655 1405 F 26060 -320 U 25740 Net Operating Income 5715 3553 U 9268 -1888 F 7380 Flexible Budget Planning Budget Jobs 128 120 Revenue (128*276) (120*276) Expenses: Technician wages 8500 8500 Mobile lab operating exp. 4600 + (128*34) 4600 + (120*34) Office expenses 2400 + (128*4) 2400 + (120*4) Advertising expenses 1610 1610 Insurance 2870 2870 Miscellaneous expenses 960 + (128*2) 960 + (120*2) Revenue & Spending Variance = Flexible budget - Actual results Activity Variance = Planning budget - Flexible budget * Increase in Sales & net operating income = Favourable * Decrease in Sales & net operating income = Unfavourable *Decrease in Expenses = Favourable *Increase in Expenses = Unfavourable
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