Question

Varcoe Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 35,000 customers, but actually served 30,000 customers. Revenue is $3.90 per customer served. Wages and salaries are $35,100 per month plus $1.30 per customer served. Supplies are $0.60 per customer served. Insurance is $9,300 per month. Miscellaneous expenses are $7,400 per month plus $0.30 per customer served. Required: Prepare a report showing the company's activity variances for September. 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). Input all amounts as positive values and enter any losses with a minus sign.)

Answer 1

Answer:

consumers served budget 35,000

consumers served actual 30,000

budgeted revenue per consumer served = $3.90

wages = $35,100 fixed + $1.30 per consumer served

supplies = $0.60 per consumer served

insurance = $9,300

miscellaneous expenses = $7,400 + $0.30 per consumer served

Activity variances:

                                  Actual             Budgeted            Variance

Revenue                   $117,000          $136,500            $19,500 UF

Wages                       $74,100            $80,600             $6,500 F

Supplies                    $18,000            $21,000              $3.000 F

Insurance                   $9,300             $9,300               no variation

Miscellaneous          $16,400            $17,900               $1,500 F

total expense          $117,800          $128,800              $11,000 F

Net income                 ($800)             $7,700               $8,500 UF