FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Ruozzo Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for July.
| Fixed Element per Month | Variable Element per Customer Served | Actual Total for July | |||||
| Revenue | $ | 4,500 | $ | 100,000 | |||
| Employee salaries and wages | $ | 43,100 | $ | 900 | $ | 63,300 | |
| Travel expenses | $ | 500 | $ | 11,500 | |||
| Other expenses | $ | 36,900 | $ | 37,900 | |||
When the company prepared its planning budget at the beginning of July, it assumed that 27 customers would have been served. However, 22 customers were actually served during July.
The activity variance for net operating income for July would have been closest to: 16,400 F or U, 15,500 F or U.
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