AirQual Test Corporation provides on-site air quality testing services. The company provided the following cost formulas and actual results for the month of February: Fixed Component Variable Component per Month per Job Actual Total for February Revenue $ 280 $ 30,850 Technician wages $ 8,500 $ 8,350 Mobile lab operating expenses $ 4,700 $ 32 $ 8,380 Office expenses $ 2,700 $ 2 $ 2,790 Advertising expenses $ 1,620 $ 1,690 Insurance $ 2,880 Miscellaneous expenses $ 920 $ 1 $ 2,880 $ 345 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $32 per job, and the actual mobile lab operating expenses for February were $8,380. The company expected to work 120 jobs in February but actually worked 126 jobs. Required: Prepare a flexible budget performance report for February. Note: 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 Actual Results 126 $ 30,850 Revenue Expenses: Technician wages 8,350 Mobile lab operating expenses 8,380 Office expenses 2,790 Advertising expenses 1,690 Insurance 2,880 Miscellaneous expenses Total expenses Net operating income $ 6,415 345 24,435 Flexible Planning Budget Budget
AirQual Test Corporation provides on-site air quality testing services. The company provided the following cost formulas and actual results for the month of February: Fixed Component Variable Component per Month per Job Actual Total for February Revenue $ 280 $ 30,850 Technician wages $ 8,500 $ 8,350 Mobile lab operating expenses $ 4,700 $ 32 $ 8,380 Office expenses $ 2,700 $ 2 $ 2,790 Advertising expenses $ 1,620 $ 1,690 Insurance $ 2,880 Miscellaneous expenses $ 920 $ 1 $ 2,880 $ 345 The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus $32 per job, and the actual mobile lab operating expenses for February were $8,380. The company expected to work 120 jobs in February but actually worked 126 jobs. Required: Prepare a flexible budget performance report for February. Note: 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 Actual Results 126 $ 30,850 Revenue Expenses: Technician wages 8,350 Mobile lab operating expenses 8,380 Office expenses 2,790 Advertising expenses 1,690 Insurance 2,880 Miscellaneous expenses Total expenses Net operating income $ 6,415 345 24,435 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 provided the following cost formulas and actual
results for the month of February:
Fixed
Component
per Month
Variable
Component
Actual
Total for
February
per Job
Revenue
$ 280
$ 30,850
Technician wages
$ 8,500
$ 8,350
Mobile lab operating expenses
$ 4,700
$ 32
$ 8,380
Office expenses
$ 2,700
$ 2
$ 2,790
Advertising expenses
$ 1,620
$ 1,690
Insurance
$ 2,880
Miscellaneous expenses
$ 920
$ 1
$ 2,880
$ 345
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,700 plus
$32 per job, and the actual mobile lab operating expenses for February were $8,380. The company expected to work 120 jobs in
February but actually worked 126 jobs.
Required:
Prepare a flexible budget performance report for February.
Note: 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
Actual
Results
126
$ 30,850
Revenue
Expenses:
Technician wages
8,350
Mobile lab operating expenses
8,380
Office expenses
2,790
Advertising expenses
1,690
Insurance
2,880
Miscellaneous expenses
345
Total expenses
24,435
Net operating income
$
6,415
Flexible
Planning
Budget
Budget
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