MANAGERIAL ACCT W/CONNECT >IC<
15th Edition
ISBN: 9781259405303
Author: Garrison
Publisher: MCG
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Chapter 9, Problem 6E
EXERCISE 9-6 Critique a Variance ReportLO9-6
The Terminator Inc. provides on-site residential pest extermination services. The company has several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:
Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why, or why not?
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Critique a Variance Report
The Terminator Inc. provides on-site residential pest extermination services. The company bas several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:
Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why or Why not?
Required:
Using Exhibit 9–9 as your guide, prepare the company’s flexible budget for July.
The Terminator Inc. provides on-site residential pest extermination services. The company has
several mobile teams who are dispatched from a central location in company-owned trucks. The
EXERCISE 9-6 Critique a Variance Report LO9-6
company uses the number of jobs to measure activity. At the beginning of April, the compe
budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing
budgeted revenues and costs to the actual revenues and costs appears below:
The Terminator Inc.
Variance Report
For the Month Ended April 30
Planning
Budget
Actual
Results
Variances
105
100
Jobs ...
..
Revenue ....
$20,520 $19,500
$ 1,020 F
Expenses:
Mobile team operating costs .
Exterminating supplies
Advertising
Dispatching costs ..
Office rent ..
320 U
10,000
1,800
10,320
960
840 F
800
800
..
2,340
140 U
1,800
2,100
2,200
1,800
2,100
Insurance.
0.
Total expense ...
18,320
18,700
380 F…
Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table
provides estimates concerning the company's costs:
Fixed Cost Cost per Car
per Month
Washed
Cleaning supplies
Electricity
$ 0. 60
$ 0. 08
$ 0. 25
$ 0. 20
$ 1,300
Maintenance
Wages and salaries
Depreciation
$ 4,400
$ 8,100
$ 1,900
$ 1,600
Rent
Administrative expenses
$ 0.03
For example, electricity costs should be $1,300 per month plus $0.08 per car washed. The company expects to wash 8,100 cars in
August and to collect an average of $6.50 per car washed.
The actual operating results for August are as follows:
Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed
8,200
Revenue
$ 54,750
Expenses:
Cleaning supplies
Electricity
5,360
1,918
2,265
6,380
8,100
2,100
Maintenance
Wages and salaries
Depreciation
Rent
Administrative expenses
Total expense
1,743
27,866
$ 26,884
Net operating income
Required:
Prepare a flexible budget…
Chapter 9 Solutions
MANAGERIAL ACCT W/CONNECT >IC<
Ch. 9 - Prob. 1QCh. 9 - What is a flexible budget and how does it differ...Ch. 9 - Prob. 3QCh. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is an activity variance and what does it...Ch. 9 - What is a revenue variance and what does it mean?Ch. 9 - 9-7 What is a spending variance and what does it...Ch. 9 - 9-8 What does a flexible budget performance report...Ch. 9 - How does a flexible budget based on two cost...Ch. 9 - 9-10 What assumption is implicitly made about cost...
Ch. 9 - 9-11 What assumption is implicitly made about cost...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 2F15Ch. 9 - Prob. 3F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 -
L09-1, LO9-2, LO9-3
Adger Corporation is a...Ch. 9 - Prob. 8F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Prob. 12F15Ch. 9 - Prob. 13F15Ch. 9 - Prob. 14F15Ch. 9 - Prob. 15F15Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 -
EXERCISE 9-3 Revenue and Spending Variances...Ch. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - EXERCISE 9-6 Critique a Variance ReportLO9-6 The...Ch. 9 - Prob. 7ECh. 9 - EXERCISE 9-8 Flexible Budgets and Activity...Ch. 9 - Fixed Cost...Ch. 9 - ...Ch. 9 -
EXERCISE 9-11 Flexible Budget L09-1
Refer to the...Ch. 9 - EXERCISE 9-12 Activity Variances LO9-2
Refer to...Ch. 9 - ...Ch. 9 -
EXERCISE 9-14 Prepare a Flexible Budget...Ch. 9 - Prob. 15ECh. 9 -
EXERCISE 9-16 Flexible Budgets and Revenue and...Ch. 9 - EXERCISE 9-17 Flexible Budget Performance Report...Ch. 9 - Prob. 18ECh. 9 - Prob. 19PCh. 9 -
PROBLEM 9-20 Activity and Spending Variances...Ch. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 -
PROBLEM 9-24 Critiquing a Report; Preparing a...Ch. 9 -
PROBLEM 9-25 Critiquing a Variance Report;...Ch. 9 - Prob. 26CCh. 9 - ...Ch. 9 - Prob. 28C
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- Question 2arrow_forwardFix the redarrow_forwardCurrent Attempt in Progress Concord Incasements manufactures protective cases for MP3 players. During November, the company's workers clocked 830 more direct labor hours than the flexible budget amount of 25,620 hours to complete 112,600 cases for the Christmas season. All workers were paid $9.03 per hour, which was $0.47 less than the standard wage rate. Calculate Concord's direct labor efficiency variance. Direct labor efficiency variance $arrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY