Answered: AirQual Test Corporation provides…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter3: Process Cost Systems

Section: Chapter Questions

Problem 4E: The cost accountant for River Rock Beverage Co. estimated that total factory overhead cost for the...

See similar textbooks

Related questions

Question

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:

	Fixed Component per Month	Variable Component per Job	Actual Total for February
Revenue				$	280	$	28,050
Technician wages	$	8,200				$	8,050
Mobile lab operating expenses	$	4,900		$	32	$	8,260
Office expenses	$	2,400		$	2	$	2,470
Advertising expenses	$	1,570				$	1,640
Insurance	$	2,890				$	2,890
Miscellaneous expenses	$	930		$	2	$	455

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,900 plus $32 per job, and the actual mobile lab operating expenses for February were $8,260. The company expected to work 110 jobs in February, but actually worked 114 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (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.)

Expert Solution