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18 September, 03:11

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $33 per job, and the actual mobile lab operating expenses for February were $9,160. The company expected to work 140 jobs in February, but actually worked 142 jobs. Required: Prepare a flexible budget performance report showing AirQual Test Corporation revenue and spending variances and activity variances for February. (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.)

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  1. 18 September, 06:53
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    Spending variances 226 Un Favorable

    Activity variances 66 UnFavorable

    Explanation:

    Budgeted mobile lab operating expenses $4,700 plus $33 per job,

    Actual mobile lab operating expenses February $9,160.

    Budgeted jobs in February, 140

    actually worked 142 jobs

    Flexible budget performance report

    AirQual Test Corporation

    Spending variances for February

    Flexible Budget Actual Result Spending

    For 142 jobs Variances

    Lab Operating Expense 9386 9160 226 UnFav

    Spending variances = Actual Expenses - budgeted Expenses

    Spending variances = $9,160 - ($4,700 + $33 * 142)

    Spending variances = $9,160 - ($4,700 + $4686)

    Spending variances = $9,160 - 9386 = 226 Un Favorable

    Flexible budget performance report

    AirQual Test Corporation

    Activity variances for February

    Budget Expense Flexible Bud Activity

    For 140 jobs For 142 jobs Variances

    Lab Operating Expense 9320 9386 66 Unfav

    Activity variances = Flexible Budget Expenses - Planned budgeted Expenses

    Activity variances = $9,386 - ($4,700 + $33 * 140)

    Activity variances = $9,386 - ($4,700 + $4620)

    Activity variances = $9,386 - 9320 = 66 UnFavorable
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