Harold’s Roof Repair has provided the following data concerning its costs: |
Fixed Cost per Month | Cost per Repair-Hour |
Wages and salaries | $ | 21,400 | $ | 15.00 | |
Parts and supplies | $ | 7.00 | |||
Equipment depreciation | $ | 2,740 | $ | .30 | |
Truck operating expenses | $ | 5,780 | $ | 1.50 | |
Rent | $ | 4,680 | |||
Administrative expenses | $ | 3,820 | $ | .40 | |
For example, wages and salaries should be $21,400 plus $15.00 per repair-hour. The company expected to work 2,600 repair-hours in June, but actually worked 2,500 repair-hours. The company expects its sales to be $46.00 per repair-hour. |
Required: |
Compute the company’s activity variances for June. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) |
Harold's Roof Repair Activity Variances For the Month Ended June 30 | ||
Revenue | $ | U |
Expenses: | ||
Wages and salaries | F | |
Parts and supplies | F | |
Equipment depreciation | F | |
Truck operating expenses | F | |
Rent | None | |
Administrative expenses | F | |
Total expense | F | |
Net operating income | $ | U |
Explanation:
Harold's Roof Repair Activity Variances For the Month Ended June 30 | |||||||
Planning Budget | Flexible Budget | Activity Variances | |||||
Repair-hours (q) | 2,600 | 2,500 | |||||
Revenue ($46.00q) | $ | 119,600 | $ | 115,000 | $ | 4,600 | U |
Expenses: | |||||||
Wages and salaries ($21,400 + $15.00q) | 60,400 | 58,900 | 1,500 | F | |||
Parts and supplies ($7.00q) | 18,200 | 17,500 | 700 | F | |||
Equipment depreciation ($2,740 + $.30q) | 3,520 | 3,490 | 30 | F | |||
Truck operating expenses ($5,780 + $1.50q) | 9,680 | 9,530 | 150 | F | |||
Rent ($4,680) | 4,680 | 4,680 | 0 | None | |||
Administrative expenses ($3,820 + $.40q) | 4,860 | 4,820 | 40 | F | |||
Total expense | 101,340 | 98,920 | 2,420 | F | |||
Net operating income | $ | 18,260 | $ | 16,080 | $ | 2,180 | U |