Pag 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: Revenue Employee salaries and wages Travel expenses Other expenses Fixed Element per Month $50,000 Variable Element per Customer Served $5,000 $1,100 $600 Actual Total for May $160,000 $88,000 $19,000 $34,500 $36,000 When preparing its planning budget the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 customers. Required (all computations pertain to the month of May): 1. What amount of revenue would be included in Adger's flexible budget? 2. What amount of employee salaries and wages would be included in Adger's flexible budget? 3. What amount of travel expenses would be included in Adger's flexible budget?
Pag 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: Revenue Employee salaries and wages Travel expenses Other expenses Fixed Element per Month $50,000 Variable Element per Customer Served $5,000 $1,100 $600 Actual Total for May $160,000 $88,000 $19,000 $34,500 $36,000 When preparing its planning budget the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 customers. Required (all computations pertain to the month of May): 1. What amount of revenue would be included in Adger's flexible budget? 2. What amount of employee salaries and wages would be included in Adger's flexible budget? 3. What amount of travel expenses would be included in Adger's flexible budget?
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: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:
Revenue
Employee salaries and wages
Travel expenses
Other expenses
Fixed Element
per Month
$50,000
$36,000
Variable Element
per Customer
Served
$5,000
$1,100
$600
Actual Total
for May
$160,000
$88,000
$19,000
$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 customers.
Required (all computations pertain to the month of May):
1. What amount of revenue would be included in Adger's flexible budget?
2. What amount of employee salaries and wages would be included in Adger's flexible budget?
3. What amount of travel expenses would be included in Adger's flexible budget?
4. What amount of other expenses would be included in Adger's flexible get?
5. What net operating income would appear in Adger's flexible budget?
6. What is Adger's revenue variance?
7. What is Adger's employee salaries and wages spending variance?
8. What is Adger's travel expenses spending variance?
9. What is Adger's other expenses spending variance?
10. What amount of revenue would be included in Adger's planning budget?
11. What amount of employee salaries and wages would be included in Adger's planning budget?
12. What amount of travel expenses would be included in Adger's planning budget?
13. What amount of other expenses would be included in Adger's planning budget?
14. What activity variance would Adger report with respect to its revenue?
15. What activity variances would Adger report with respect to each of its expenses?
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