11 During May, Hiles Corporation budgeted for 31,000 customers, but actually ser

Question

11 During May, Hiles Corporation budgeted for 31,000 customers, but actually served 29,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served Revenue: $4.61q Wages and salaries: $35,600+$1.77q Supplies: $0.67q Insurance: $12,600 Miscellaneous expense: $5,600+$0.17q Prepare the company's flexible budget for May Revenue Expenses Wages and salaries Supplies Insurance Miscellaneous expense Total Expenses Net Operating income A favorable spending variance occurs when the actual cost exceeds the amount of cost in the static planning budget 2

Explanation / Answer

Hiles Corporation Flexible Budget For the month of May Budgeted Actual Difference Amount Amount Amount F / U Revenue $ 1,42,910 $ 1,33,690 $   (9,220) U Expenses: Wages and Salaries ($35,600) + ($1.77 * 31,000) $     90,470 ($35,600) + ($1.77 * 29,000) $     86,930 $      3,540 F Supplies ($0.67 * 31,000) $     20,770 ($0.67 * 29,000) $     19,430 $      1,340 F Insurance ($12,600) $     12,600 ($12,600) $     12,600 $             -   None Miscellaneous Expenses ($5,600) + ($0.17 * 31,000) $     10,870 ($5,600) + ($0.17 * 29,000) $     10,530 $         340 F Total Expenses $ 1,34,710 $ 1,29,490 $      5,220 F Net Operating Income $        8,200 $        4,200 $   (4,000) U

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