1. Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners including boarding, training, and veterinary care. The table below provides both the budgeted and actual statements of operating income for the first quarter of 2018. Service revenues Less: Operating expenses Labor wages expense Insurance expense Rent expense Supplies and feed expense Operating income Budget $3,800,000 1,750,000 600,000 225,000 750.000 $475,000 Actual $3,950,000 1,820,000 575,000 225,000 795.000 $ 535,000 Required: Prepare a variance analysis to explain the differences between actual and budgeted amounts. Compute a variance for each line item and indicate whether each variance is favorable or unfavorable.

1. Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners including boarding, training, and veterinary care. The table below provides both the budgeted and actual statements of operating income for the first quarter of 2018. Service revenues Less: Operating expenses Labor wages expense Insurance expense Rent expense Supplies and feed expense Operating income Budget $3,800,000 1,750,000 600,000 225,000 750.000 $475,000 Actual $3,950,000 1,820,000 575,000 225,000 795.000 $ 535,000 Required: Prepare a variance analysis to explain the differences between actual and budgeted amounts. Compute a variance for each line item and indicate whether each variance is favorable or unfavorable.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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