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 $21,400 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 $50.00 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 $ 21,400 $ 15.00 Parts and supplies $ 7.20 Equipment depreciation $ 2,710 $ 0.50 Truck operating expenses $ 5,730 $ 1.60 Rent $ 4,640 Administrative expenses $ 3,830 $ 0.60

Explanation / Answer

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.)

Static budget Flexible budget Activity variance Revenue 145000 140000 5000 U Wages and salaries 64900 63400 1500 F parts and supplies 20880 20160 720 F Equipment depreciation 4160 4110 50 F Truck operating expenses 10370 10210 160 F Rent 4640 4640 None Administrative expenses 5570 5510 60 F Net operating income 34480 31970 2510 U

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