Question

Varcoe Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 34,500 customers, but actually served 29,500 customers. Revenue is $3.89 per customer served. Wages and salaries are $35,000 per month plus $1.29 per customer served. Supplies are $0.59 per customer served. Insurance is $9,200 per month. Miscellaneous expenses are $7,300 per month plus $0.29 per customer served.
Required:Prepare a report showing the company's activity variances for September. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Answer 1

Answer:

Varcoe Corporation

Report showing activity variances for September:

                                                  Budgeted       Actual     Variance

Number of customers served      34,500      29,500       5,000 U

Revenue per customer $3.89  $134,205    $114,755   $19,450 U

Expenses:

Wages and salaries ($35,000

plus $1.29 per customer)            79,505      73,055     $6,450 F

Supplies expense ($0.59 per

 customer served)                      20,355       17,405        2,950 F

Insurance per month                    9,200        9,200        0         N

Miscellaneous expense ($7,300

 plus $0.29 per customer)         17,305       15,855        1,450 F

Total expenses                       $126,365    $115,515   $10,850 F

Net income                                 $7,840        ($760)    $8,600 U

Explanation:

a) Data and Calculations:

                                                  Budgeted       Actual

Number of customers served      34,500      29,500

Revenue per customer $3.89 per customer served

Expenses:

Wages and salaries ($35,000 plus $1.29 per customer)

Supplies expense ($0.59 per customer served)  

Insurance per month = $9,200

Miscellaneous expense ($7,300 plus $0.29 per customer)