Jake’s Roof Repair has provided the following data concerning its costs: For exa

Question

Jake’s Roof Repair has provided the following data concerning its costs:

For example, wages and salaries should be $21,100 plus $15.00 per repair-hour. The company expected to work 2,900 repair-hours in May, but actually worked 2,800 repair-hours. The company expects its sales to be $47.00 per repair-hour.

Required:

Compute the company’s activity variances 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.)

Fixed Cost
per Month Cost per
Repair-Hour Wages and salaries $ 21,100 $ 15.00 Parts and supplies $ 7.00 Equipment depreciation $ 2,790 $ 0.40 Truck operating expenses $ 5,760 $ 1.50 Rent $ 4,700 Administrative expenses $ 3,830 $ 0.60

Explanation / Answer

Flexible budget Activity variances Planning budget Revenue 131600 4700 U 136300 Expenses: Wages and salaries 63100 1500 F 64600 Parts and supplies 19600 700 F 20300 Equipment depreciation 3910 40 F 3950 Truck operating expenses 9960 150 F 10110 Rent 4700 0 None 4700 Administrative expenses 5510 60 F 5570 Total expense 106780 2450 F 109230 Net operating income 24820 2250 U 27070

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