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 279 $ 30 Fixed Component per Month Actual Total Component per Job for February Revenue Technician wage:s Mobile lab operating expenses ffice expenses Advertising expenses Insurance Miscellaneous expenses $ 8,600 $ 4,608 $ 2,408 $ 1,59e $ 2,880 $ 978 $ 27,940 $ 8,456e $ 7,740 $ 2,47e $ 1,66e $ 2,880 $495 The company uses the number of jobs as its measure oT activity. For example, mobile lab operating expenses should be $4,600 plus $30 per job, and the actual mobile lab operating expenses for February were $7,740. The company expected to work 110 jobs in February, but actually worked 118 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.)

Explanation / Answer

AirQual Test Corporation

Flexible Budget Performance Report

For the month ended February 28

Revenue and

Spending Variances

Actual Result

Revenue and

Spending Variances

Flexible Budget Activity Variances Planning Budget Jobs        118           118            110 Revenue (279 per job) 27,940 4982 (U)     32,922 2,232 (F)        30,690 Expences Technical Wages - Fixed     8,450 150 (F)        8,600 None          8,600 Mobile Lab Operating Expences 7,740 400 (F)      8,140 240 (U)      7,900 (4600 + 30 x No. of Jobs) Office Expences 2,470 166 (F)    2,636 16 (U)        2,620 (2400 + 2 x No. of Jobs) Advertisement Expences - Fixed     1,660 70 (U)        1,590 None        1,590 Insurance - Fixed 2,880 None          2,880 None          2,880 Miscellaneous Expences        495 711 (F)         1,206 16 (U)           1,190 (970 + 2 x No. of Jobs) Total Expences 23,695 1357 (U)       25,052 272 (U)        24,780 Net Operating Income      4,245 3625 (U)        7,870 1,960 (F)             5,910

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