Answer:
AirQual Test Corporation
Flexible Budget Performance Report for February:
Fixed Variable Flexible Actual
Component Budget Total
Revenue $ 275 $38,500 $ 38,500 0 None
Technician wages $ 8,100 $8,100 $ 7,950 150 F
Mobile lab operating
expenses $4,800 $ 33 $10,080 $ 9,590 490 F
Office expenses $ 2,400 $ 2 $2,720 $ 2,550 170 F
Advertising expenses $1,590 $1,590 $ 1,660 70 U
Insurance $ 2,850 $2,850 $ 2,850 0 None
Miscellaneous expenses $ 960 $ 2 $1,280 $ 565 715 F
Explanation:
Fixed Component Variable Budget Actual
Revenue $ 275 $41,250 $ 38,500
Technician wages $ 8,100 $8,100 $ 7,950
Mobile lab operating
expenses $4,800 $ 33 $9,750 $ 9,590
Office expenses $ 2,400 $ 2 $2,700 $ 2,550
Advertising expenses $1,590 $1,590 $ 1,660
Insurance $ 2,850 $2,850 $ 2,850
Miscellaneous expenses $ 960 $ 2 $1,260 $ 565
b) Variable elements for the flexible budget:
1) Mobile lab operating expenses = $4,800 + ($33 x 160) = $10,080
2) Office Expenses = $2,400 + ($2 x 160) = $2,720
3) Miscellaneous expenses = $960 + ($2 x 160) = $1,280
c) A flexible budget is a budget that is flexed with regard to the volume of activity, with respect to the variable elements. This budget type changes in value as a result of the changes in the volume of activity. It is different from a static budget, which does not change in value following the level of activity and does not account for changing incomes and expenses.
