Varriano Corporation bases its budgets on the activity measure customers served.
ID: 2582866 • Letter: V
Question
Varriano Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 41,000 customers, but actually served 39,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting:
Required:
Prepare a report showing the company's activity variances for October. Indicate in each case whether the variance is favorable (F) or unfavorable (U). (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance) next to the "activity variances" column. Input all amounts as positive values.)
Fixed element Revenue Wages and salaries Supplies Insurance Miscellaneous expense per month $37,50e $ 8,50e Variable element per customer $ 3.86 $ 1.26 0.56 $ 0.06 $ 0.46 $7,50eExplanation / Answer
Varriano corporation Activity Variance For The Month Ended October 31 Customers Served 39000 41000 Revenue @ 3.86 150540 158260 7720 F Expenses Wages and salaries (37500+1.26pu) 86640 89160 -2520 U Supplies 21840 22960 -1120 U Insurance 8500 8500 0 - Miscellaneous (7500+.46) 25440 26360 -920 U Total Expenses 142420 146980 -4560 U Net Operating Income 8120 11280 3160 F
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