1. Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners including boarding, training, and veterinary care. The table below provides both the budgeted and actual statements of operating income for the first quarter of 2018. Service revenues Less: Operating expenses Labor wages expense Insurance expense Rent expense Supplies and feed expense Operating income Budget $3,800,000 1,750,000 600,000 225,000 750.000 $475,000 Actual $3,950,000 1,820,000 575,000 225,000 795.000 $ 535,000 Required: Prepare a variance analysis to explain the differences between actual and budgeted amounts. Compute a variance for each line item and indicate whether each variance is favorable or unfavorable.
1. Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners including boarding, training, and veterinary care. The table below provides both the budgeted and actual statements of operating income for the first quarter of 2018. Service revenues Less: Operating expenses Labor wages expense Insurance expense Rent expense Supplies and feed expense Operating income Budget $3,800,000 1,750,000 600,000 225,000 750.000 $475,000 Actual $3,950,000 1,820,000 575,000 225,000 795.000 $ 535,000 Required: Prepare a variance analysis to explain the differences between actual and budgeted amounts. Compute a variance for each line item and indicate whether each variance is favorable or unfavorable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners
including boarding, training, and veterinary care. The table below provides both the budgeted
and actual statements of operating income for the first quarter of 2018.
Service revenues
Less: Operating expenses
Labor wages expense
Insurance expense
Rent expense
Supplies and feed expense
Operating income
Budget
$3,800,000
1,750,000
600,000
225,000
750.000
$ 475,000
Actual
$3,950,000
1,820,000
575,000
225,000
795,000
$ 535,000
Required:
Prepare a variance analysis to explain the differences between actual and budgeted
amounts. Compute a variance for each line item and indicate whether each variance is
favorable or unfavorable.
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