Question

Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October.
Fixed Element per Month Variable Element per Customer Served Actual Total for October
Revenue $4,100 $182,900
Employee salaries and wages $42,300 $1,300 $98,800
Travel expenses $700 $30,500
Other expenses $31,500 $31,900

When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October.

The revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for October would have been closest to: __________

a. $2,500 U
b. $23,000 F
c. $2,500 F
d. $23,000 U

Answer 1

Answer:

c. $2,500 F

Explanation:

The computation of the revenue variance is shown below:

Particulars       Flexible budget           Actual            Variance

Revenue          $180,400                   $182,900        $2,500 Favorable

                     ($4,100 × 44 customers)

hence, the revenue variance is $2,500 favorable

hence, the option c is correct