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: Fixed Component per Month Revenue Variable Component per Job $ 280 Actual Total for February $ 30,850 Technician wages $ 8,200 $ 8,050 Mobile lab operating expenses $ 4,900 $ 31 $ 8,460 Office expenses $ 2,800 $ 3 $ 3,010 Advertising expenses $ 1,590 $ 1,660 Insurance $ 2,860 Miscellaneous expenses $ 950 $ 2 $ 2,860 $ 495 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $31 per job, and the actual mobile lab operating expenses for February were $8,460. The company expected to work 120 jobs in February, but actually worked 122 jobs. Required: Prepare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Jobs Revenue Actual Results 122 $ 30,850 Expenses: Technician wages 8,050 Mobile lab operating expenses 8,460 Office expenses 3,010 Advertising expenses 1,660 Insurance 2,860 Miscellaneous expenses Total expense Net operating income 495 24,535 $ 6,315 Flexible Planning Budget Budget
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: Fixed Component per Month Revenue Variable Component per Job $ 280 Actual Total for February $ 30,850 Technician wages $ 8,200 $ 8,050 Mobile lab operating expenses $ 4,900 $ 31 $ 8,460 Office expenses $ 2,800 $ 3 $ 3,010 Advertising expenses $ 1,590 $ 1,660 Insurance $ 2,860 Miscellaneous expenses $ 950 $ 2 $ 2,860 $ 495 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $31 per job, and the actual mobile lab operating expenses for February were $8,460. The company expected to work 120 jobs in February, but actually worked 122 jobs. Required: Prepare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) AirQual Test Corporation Flexible Budget Performance Report For the Month Ended February 28 Jobs Revenue Actual Results 122 $ 30,850 Expenses: Technician wages 8,050 Mobile lab operating expenses 8,460 Office expenses 3,010 Advertising expenses 1,660 Insurance 2,860 Miscellaneous expenses Total expense Net operating income 495 24,535 $ 6,315 Flexible Planning Budget Budget
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text: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:
Fixed
Component
per Month
Variable
Component
per Job
Actual
Total for
February
Revenue
$ 280
$ 30,850
Technician wages
$ 8,200
$ 8,050
Mobile lab operating expenses
$ 4,900
$ 31
$ 8,460
Office expenses
$ 2,800
$ 3
$ 3,010
Advertising expenses
$ 1,590
$ 1,660
Insurance
$ 2,860
Miscellaneous expenses
$ 950
$ 2
$ 2,860
$ 495
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus
$31 per job, and the actual mobile lab operating expenses for February were $8,460. The company expected to work 120 jobs in
February, but actually worked 122 jobs.
Required:
Prepare a flexible budget performance report showing AirQual Test Corporation's revenue and spending variances and activity
variances for February. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no
effect (i.e., zero variance). Input all amounts as positive values.)
AirQual Test Corporation
Flexible Budget Performance Report
For the Month Ended February 28
Jobs
Revenue
Actual
Results
122
$ 30,850
Expenses:
Technician wages
8,050
Mobile lab operating expenses
8,460
Office expenses
3,010
Advertising expenses
1,660
Insurance
2,860
Miscellaneous expenses
Total expense
Net operating income
495
24,535
$ 6,315
Flexible
Planning
Budget
Budget
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