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 (3.50q) 38,000 37,000 $ 133,800 $ 129,500 $ 4,300 F Expenses Wages and salaries ($23,700+ $1.27q) Supplies (S0.67q) Insurance (S5,600) Miscellaneous expense ($4,600 +$.36q) 71.960 70.690 1.270 U 22,290 24,790 2,500 F 5,600 15,420 17,920 2,500 F 5,600 Total expense 115,270 119,000 3,730 F Net operating income $ 18,530 $ 10,500 $ 8,030 F Required 1.Prepare a report showing the company's revenue and spending variances for December. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) CICCHETTI CORPORATION Revenue and Spending Variances For the Month Ended December 31 Actual Results Revenue and Spending Variances Flexible Budget Customers served 38,000 Revenue 133,800 Expenses Wages and salaries Supplies Insurance Miscellaneous expense 71,960 22,290 5,600 15,420 115,270 $18,530 Total expense 0 Net operating income 0

Explanation / Answer

Actual Revenue and spending Flexible results variance budget Customers served 38,000 38,000 Revenue 133,800 800 F 133000 Expenses: Wages and salaries 71,960 0 N 71960 supplies 22,290 3,170 F 25460 insurance 5,600 0 N 5,600 miscellaneous expense 15,420 2,860 F 18280 total expense 115,270 6,030 F 121300 net operating income 18,530 6,830 F 11700 Flexible buget = actual units * variable cost per unit budgeted + fixed cost budgeted

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