Answered: The Terminator Inc. provides on-site…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 20E: Calculating amount of factory overhead applied to work in process The overhead application rate for...

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EXERCISE 9–6 Critique a Variance Report [LO9–6]

The Terminator Inc. provides on-site residential pest extermination services. The company has several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:

[picture]

Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why, or why not?

The Terminator Inc.
Variance Report
For the Month Ended April 30
Planning
Budget
Actual
Results
Variances
100
$20,520 $19,500
Jobs...
105
Revenue
$1,020 F
Expenses:
Mobile team operating costs....
Exterminating supplies
Advertising .....
Dispatching costs
Office rent
10,320
10,000
320 U
960
1,800
800
840 F
800
2,340
2,200
140 U
1,800
1,800
Insurance ..
2,100
18,320
$ 2,200
2,100
18,700
$ 800
Total expense
380 F
$1,400 F
Net operating income

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