Wages and salaries Parts and supplies Equipment depreciation. Truck operating expenses Rent Administrative expenses Revenue Expenses per Month $ 21,000 For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,700 repair-hours. The company expects its sales to be $53.00 per repair-hour. $ 2,790 $5,780 $ 4,620 $ 3,880 Required: Compute the company's activity variances for May. (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.) Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Jake's Roof Repair Activity Variances For the Month Ended May 31 Administrative expenses Total expense Net operating income Repair-Hour $15.00 $ 7.30 $ 0.35 $ 1.80 $ 0.80
Wages and salaries Parts and supplies Equipment depreciation. Truck operating expenses Rent Administrative expenses Revenue Expenses per Month $ 21,000 For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,700 repair-hours. The company expects its sales to be $53.00 per repair-hour. $ 2,790 $5,780 $ 4,620 $ 3,880 Required: Compute the company's activity variances for May. (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.) Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Jake's Roof Repair Activity Variances For the Month Ended May 31 Administrative expenses Total expense Net operating income Repair-Hour $15.00 $ 7.30 $ 0.35 $ 1.80 $ 0.80
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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
Transcribed Image Text:**Activity Variance Analysis for Jake's Roof Repair**
This example focuses on calculating activity variances for Jake's Roof Repair for the month of May. Below are the details necessary for this analysis:
**Budgeted Costs:**
- **Wages and Salaries:**
- Per Month: $21,000
- Per Repair-Hour: $15.00
- **Parts and Supplies:**
- Per Month: $2,798
- Per Repair-Hour: $7.30
- **Equipment Depreciation:**
- Per Month: $5,780
- Per Repair-Hour: $1.80
- **Truck Operating Expenses:**
- Per Month: $3,420
- Per Repair-Hour: $1.20
- **Rent:**
- Per Month: $4,620
- **Administrative Expenses:**
- Per Month: $3,880
- Per Repair-Hour: $0.80
The company anticipated working 2,800 repair-hours but completed only 2,700. The expected sales are $53.00 per repair-hour.
**Required:**
Compute the activity variances for May by determining the effect of each variance, indicated as:
- "F" for favorable
- "U" for unfavorable
- "None" for no effect (zero variance)
Enter all amounts as positive values.
**Diagram Explanation:**
The table below summarizes the activity variances to be calculated:
1. **Revenue**: Enter expected versus actual revenue.
2. **Expenses**:
- Record and compare wages and salaries, parts and supplies, equipment depreciation, and truck operating expenses.
- Total the expenses and calculate the net operating income.
The task is to identify variances from expected values to evaluate performance accurately.
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