Cicchetti Corporation uses customers served as its measure of activity. The foll

Question

Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December: Cicchetti Corporation Comparison of Actual Results to Planning Budget For the Month Ended December 31 Actual Planning Results Budget Variances Customers served Revenue (3.40g) 27,000 26,000 $ 92,100 $ 88,400 3,700 F Expenses Wages and salaries ($22,600+$1.16q) Supplies ($0.56q) Insurance ($4,500) Miscellaneous expense ($3,500+ $.36q) 53,920 52,760 1,160 U 13,060 14,560 1,500 F 4,500 4,500 11,360 0 12,860 1,500 F Total expense 82,840 84,680 1,840 F Net operating income $ 9,260 $ 3,720 $ 5,540 F

Explanation / Answer

1. Prepare report showing revenue and spending variance :

Actual results revenue and spending variance Flexible budget Customers served 27000 27000 Revenue 92100 91800 300 F Expenses : Wages and salaries 53920 53920 None Supplies 13060 15120 2060 F Insurance 4500 4500 None Miscellaneous exp 11360 13220 1860 F Total expenses 82840 86760 3920 F Net operating income 9260 5040 4220 F

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