Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 36,700 customers, but actually served 27,300 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $5.20q Wages and salaries: $34,900 + $1.61q Supplies: $1.01q Insurance: $12,100 Miscellaneous expenses: $8,100 + $0.47q The company reported the following actual results for February: Revenue Wages and salaries Supplies $ 153,800 $ 69,700 $ 16,100
Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 36,700 customers, but actually served 27,300 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $5.20q Wages and salaries: $34,900 + $1.61q Supplies: $1.01q Insurance: $12,100 Miscellaneous expenses: $8,100 + $0.47q The company reported the following actual results for February: Revenue Wages and salaries Supplies $ 153,800 $ 69,700 $ 16,100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 36,700
customers, but actually served 27,300 customers. The company uses the following revenue and cost formulas in its budgeting, where
q is the number of customers served:
Revenue: $5.20q
Wages and salaries: $34,900 + $1.61q
Supplies: $1.01q
Insurance: $12,100
Miscellaneous expenses: $8,100 + $0.47q
The company reported the following actual results for February:
Revenue
Wages and salaries
Supplies
Insurance
Miscellaneous expense
$ 153,800
$ 69,700
$
16,100
$ 12,100
$
26,200
Required:
Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U).
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.
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