Fixed Component per Month Variable Component per Job for February Actual Total Revenue . Technician wages Mobile lab operating expenses Office expenses Advertising expenses Insurance Miscellaneous expenses $18,950 $6,450 $4,530 $3,050 $995 $1,680 $360 $6,400 $2,900 $2,600 $970 $1,680 $35 $2 $500 $3 $465 Roshardying Fleible Budget Pefomance Repot For the Month Ended March 31 Revenue and O Spending Acity Actual Varinces Rexble Verinces Paning Results (0-0 Budget 2-9) Budget Client-vits 1,100 1,00 1,00 Rasenue $180.0). $194,200 $3.800 U $198000 $18,000 F $1800 Epersesr Wagesad sarie 6500 $370. Haistigspie $150). 106,900 1,00 U 105,700 3700 U 102000 ..... 1,620 30 F 1,60 150 U 1,500 410 U 4,100 6870 2360 U 4,510 Becicty $1,00 $0.0). Rert (2,50). Labity isuance $2.0. Emplyee heath isuance $21,30) Miscelaneus $1.200 $20). 1,50 60 F 1,510 10 U 1600 28,00 0 2,500 28,00 2,800 2.00 2,600 1,300 U 21300 710 U 1420 2,800 21,300 2,130 20 U 1,00 Totalexense. 172,970 5.480 U 167490 4290 U 163200 Net opeaing home. $ 21.30 $9.280 U $30510 $13.710 F $ 16,800
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Flexible Budget Performance Report
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $2,900 plus $35 per job, and the actual mobile lab operating expenses for February were $4,530. The company expected to work 50 jobs in February, but actually worked 52 jobs.
Required:
Using Exhibit 9–8 as your guide, prepare a flexible budget performance report showing AirQual Test corporation’s revenue and spending variances and activity variances for February.
Exhibit 9–8 Performance Report Combining Activity Variances with Revenue and Spending Variances
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