Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 35,300 customers, but actually served 32,200 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.80q Wages and salaries: $33,500+ $1.19q Supplies: $0.59q Insurance: $10,700 Miscellaneous expenses: $6,700+ $0.33q The company reported the following actual results for February: Revenue Wages and salaries Supplies Insurance Miscellaneous expense Required: $ 125,800 $ 68,300 $ 14,700 $ 10,700 $ 19,200 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.
Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 35,300 customers, but actually served 32,200 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.80q Wages and salaries: $33,500+ $1.19q Supplies: $0.59q Insurance: $10,700 Miscellaneous expenses: $6,700+ $0.33q The company reported the following actual results for February: Revenue Wages and salaries Supplies Insurance Miscellaneous expense Required: $ 125,800 $ 68,300 $ 14,700 $ 10,700 $ 19,200 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.
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 35,300
customers, but actually served 32,200 customers. The company uses the following revenue and cost formulas in its budgeting,
where q is the number of customers served:
Revenue: $3.80q
Wages and salaries: $33,500+ $1.19q
Supplies: $0.59q
Insurance: $10,700
Miscellaneous expenses: $6,700 + $0.33q
The company reported the following actual results for February:
Revenue
Wages and salaries
Supplies
Insurance
Miscellaneous expense
Required:
$ 125,800
$ 68,300
$ 14,700
$ 10,700
$ 19,200
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.
Arrasmith Corporation
Flexible Budget Performance Report
For the Month Ended February 28
Actual
Results
Revenue and Spending Flexible
Variances
Budget
Activity Variances
Planning
Budget
Customers served
32,200
32,200
35,300
Revenue
Expenses:
Wages and salaries
Supplies
Insurance
Miscellaneous expense
Total expense
Net operating income
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