Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:   Fixed Element per Month Variable Element per Customer Served Actual Total for May Revenue   $5,000 $160,000 Employee salaries and wages $50,000 $1,100 $88,000 Travel expenses   $600 $19,000 Other expenses $36,000   $34,500 When preparing its planning budget the company estimated that it would serve 30 customers per month ; however, during May the company actually served 35.    What net operating income would appear in Adger's flexible budget for May? What is Adger revenue variance for May? What is Adger's employee salaries and wages spending variance for May? What is Adger's travel expenses spending for May? What is Adger's other expenses spending for May? What amount of revenue would be included in Adger's planning budget for May? What amount of employee salaries and wages would be included in Adger's planning budget for May?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

  Fixed Element per Month Variable Element per Customer Served Actual Total for May
Revenue   $5,000 $160,000
Employee salaries and wages $50,000 $1,100 $88,000
Travel expenses   $600 $19,000
Other expenses $36,000   $34,500

When preparing its planning budget the company estimated that it would serve 30 customers per month ; however, during May the company actually served 35. 

 

  1. What net operating income would appear in Adger's flexible budget for May?
  2. What is Adger revenue variance for May?
  3. What is Adger's employee salaries and wages spending variance for May?
  4. What is Adger's travel expenses spending for May?
  5. What is Adger's other expenses spending for May?
  6. What amount of revenue would be included in Adger's planning budget for May?
  7. What amount of employee salaries and wages would be included in Adger's planning budget for May?
Expert Solution
Step 1
Variable element per customer served: $5,000  
Actual Activity: 35  
Amt of Revenue $175,000  
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