1) What is Adger’s other expenses spending variance for May? (Indicate the effec
ID: 2556199 • Letter: 1
Question
1) What is Adger’s other expenses spending variance for May? (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.)
2) What amount of revenue would be included in Adger’s planning budget for May?
3) What amount of employee salaries and wages would be included in Adger’s planning budget for May?
4) What amount of travel expenses would be included in Adger’s planning budget for May?
5) What amount of other expenses would be included in Adger’s planning budget for May?
6) What activity variance would Adger report in May with respect to its revenue? (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.)
7) What activity variances would Adger report with respect to each of its expenses for May? (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.)
Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below: Fixed Element Variable Element Actual per Customer Served $6,000 $ 1,400 Total for May $ 190,000 $ 114,100 $ 17,100 $ 43,400 per Revenue Employee salaries and wages Travel expenses Other expenses Month $67,000 $46,000 $ 590 When preparing its planning budget the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 CustomersExplanation / Answer
Answer to Part 1.
Other Expenses Spending Variance = Actual Results – Flexible Budget
Flexible Budget of Other Expenses = $46,000
Actual Results of Other Expenses = $43,400
Other Expenses Spending Variance = $43,400 - $46,000
Other Expenses Spending Variance = $2,600 (F)
Answer to Part 2.
Amount of Revenue in Planning Budget = Cost per Customer Served * No. of Customers planned
Amount of Revenue in Planning Budget = $6,000 * 30
Amount of Revenue in Planning Budget = $18,000
Answer to Part 3.
Amount of Employee Salaries and Wages in Planning Budget = Variable Cost per Customer Served * No. of Customers planned + Fixed Element per month
Amount of Employee Salaries and Wages in Planning Budget = ($1,400 * 30) + $67,000
Amount of Employee Salaries and Wages in Planning Budget = $42,000 + $67,000
Amount of Employee Salaries and Wages in Planning Budget = $109,000
Answer to Part 4.
Amount of Travel Expenses in Planning Budget = Variable Cost per Customer Served * No. of Customers planned + Fixed Element per month
Amount of Travel Expenses in Planning Budget = ($590 * 30) + 0
Amount of Travel Expenses in Planning Budget = $17,700
Answer to Part 5.
Amount of Other Expenses in Planning Budget = Variable Cost per Customer Served * No. of Customers planned + Fixed Element per month
Amount of Other Expenses in Planning Budget = (0 * 30) + $46,000
Amount of Other Expenses in Planning Budget = $46,000
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