Varriano Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 41,000 customers, but actually served 39,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Revenue Wages and salaries Supplies Insurance Miscellaneous expense Fixed element per month $ 37,500 $0 $ 8,500 $ 7,500 Variable element per customer $ 3.86 $ 1.26 $ 0.56 $ 0.00 $ 0.46 Required: Prepare a report showing the company's activity variances for October. Indicate in each case whether the variance is 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.
Varriano Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 41,000 customers, but actually served 39,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Revenue Wages and salaries Supplies Insurance Miscellaneous expense Fixed element per month $ 37,500 $0 $ 8,500 $ 7,500 Variable element per customer $ 3.86 $ 1.26 $ 0.56 $ 0.00 $ 0.46 Required: Prepare a report showing the company's activity variances for October. Indicate in each case whether the variance is 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.
Question
11
Transcribed Image Text:Varriano Corporation bases its budgets on the activity measure customers served. During October, the
company planned to serve 41,000 customers, but actually served 39,000 customers. The company has
provided the following data concerning the formulas it uses in its budgeting:
Revenue
Wages and salaries
Supplies
Insurance
Miscellaneous expense
Customers served
Revenue
Expenses:
Required:
Prepare a report showing the company's activity variances for October. Indicate in each case whether the
variance is favorable (F) or unfavorable (U).
Wages and salaries
Supplies
Insurance
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.
Miscellaneous expense
Total expense
Net operating income
Fixed element
per month
$ 37,500
$0
$ 8,500
$ 7,500
Flexible
Budget
Varriano Corporation
Activity Variances
For the Month Ended October 31
39,000
Variable
element per
customer
$ 3.86
$ 1.26
$ 0.56
$ 0.00
$ 0.46
Planning
Budget
41,000
Activity Variances
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