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 Actual Total Fixed Component per Month Component per Job for February $ 36,310 $ 8,256e $ 8,648 $3,010 $1,65e $ 2,870 $515 Revenue $ 8,400 $ 4,600 Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses 2,600 $ 1,580 $ 2,870 $930 The company uses the number of jobs as its measure of 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 $8,640. The company expected to work 140 jobs in February, but actually worked 150 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

Flexible Static Fixed Variable budget budget component component no of jobs 150 140 Revenue 279 41850 39060 Technicial wages 8,400 8,400 8,400 mobile lab operating expense 4,600 30 9100 8800 office expense 2,600 4 3200 3160 advertising expense 1,580 1,580 1,580 insurance 2,870 2,870 2,870 miscellaneous expense 930 2 1230 1210 total expense 20980 36 26,380 26,020 Flexible budget = fixed component + 150 jobs *variable component Static budget    = Fixed component + 140 jobs *variable component Flexible budget performance report Actual Revenue & spending Flexible Activity variance Static budget budget variance budget no of jobs 150 150 140 Revenue 36,310 5,540 U 41850 2790 F 39060 less:Exoenses Technicial wages 8,250 150 F 8,400 0 N 8,400 mobile lab operating expense 8,640 460 F 9100 300 U 8800 office expense 3,010 190 F 3200 40 U 3160 advertising expense 1,650 70 U 1,580 0 N 1,580 insurance 2,870 0 N 2,870 0 N 2,870 miscellaneous expense 515 715 F 1,230 20 U 1,210 total expense 24,935 1,445 F 26,380 360 U 26,020 net operating income 11,375 4,095 U 15,470 2,430 F 13,040

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