AirQual Test Corporation provides on-site air quality testing services. The comp

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:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,800 plus $35 per job, and the actual mobile lab operating expenses for February were $9,190. The company expected to work 130 jobs in February, but actually worked 132 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.)

Fixed Component
per Month Variable
Component per Job Actual Total
for February Revenue $ 277 $ 33,260 Technician wages $ 8,300 $ 8,150 Mobile lab operating expenses $ 4,800 $ 35 $ 9,190 Office expenses $ 2,600 $ 4 $ 2,970 Advertising expenses $ 1,590 $ 1,660 Insurance $ 2,860 $ 2,860 Miscellaneous expenses $ 960 $ 1 $ 395 AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Actual Results Flexible Budget Planning Budget Jobs 132 Revenue $33,260 Expenses Technician wages Mobile lab operating Office expenses Advertising expenses Insurance Miscellaneous expenses 8,150 9,190 2,970 1,660 2,860 395 25,225 $ 8,035 expenses Total expense Net operating income

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Jobs 132 132 130 Revenue 33260 3304 U 36564 554 F 36010 Expenses: Technician wages 8150 150 F 8300 0 None 8300 Mobile lab operating expenses 9190 230 F 9420 70 U 9350 Office expenses 2970 158 F 3128 8 U 3120 Advertising expenses 1660 70 U 1590 0 None 1590 Insurance 2860 0 None 2860 0 None 2860 Miscellaneous expenses 395 697 F 1092 2 U 1090 Total expense 25225 1165 F 26390 80 U 26310 Net operating income 8035 2139 U 10174 474 F 9700

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