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: Variable Fixed Component Component per Actual Tota.l per Month Job $278 Revenue Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses $ 8,000 $4,900 $ 2,400 $ 1,610 $ 2,850 $ 950 for February $30,610 $ 7,850 $ 8,460 $ 2,730 $ 1,680 $ 2,850 $ 375 $ 31 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $31 per job, and the actual mobile lab operating expenses for February were $8,460. The company expected to work 120 jobs in February, but actually worked 130 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.) AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Actual Results Flexible Budge Planning Budge Jobs 130 Revenue S 30,610 Expenses Technician wages Mobile lab operating Office expenses Advertising expenses Insurance Miscellaneous expenses 7,850 8,460 2,730 1,680 2,850 375 23,945 S 6,665 expenses Total expense Net operating income

Explanation / Answer

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Jobs 130 130 120 Revenue 30610 5530 U 36140 2780 F 33360 Expenses: Technician wages 7850 150 F 8000 0 None 8000 Mobile lab operating expenses 8460 470 F 8930 310 U 8620 Office expenses 2730 190 F 2920 40 U 2880 Advertising expenses 1680 70 U 1610 0 None 1610 Insurance 2850 0 None 2850 0 None 2850 Miscelleneous expenses 375 705 F 1080 10 U 1070 Total expenses 23945 1445 F 25390 360 U 25030 Net operating income 6665 4085 U 10750 2420 F 8330

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