D) $3,122 4) Palmerton Corporatio of wells serviced. The company has provided th

Question

D) $3,122 4) Palmerton Corporatio of wells serviced. The company has provided the following fixed and Vati it uses for bud n is an oil well service company that measures its output by the number geting purposes and the actual results of operations for December Variable Actual Total Fixed Element per Month Element per for Well Serviced December Revenue Employee salaries and wages Servicing materials Other expenses 3,500 159,800 1,000 87,900 $ 600 $ 27,400 $ 29,500 $ 41,500 30,000 When the company prepared its planning budget at the beginning of December, it assumed that 40 wells would have been serviced. However, 45 wells were actually serviced during December. The variance for net operating income in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for December would have been closest to: A) $10,500 F B) $10,500 U C) $1,000F D) $1,000 U

Explanation / Answer

Actual net operating income=159800-87900-27400-29500= $15000 Net operating income in flexible budget=45*(3500-1000-600)-41500-30000= $14000 Revenue and spending variance=15000-14000 = $1000 F Option C is correct

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