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

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

Step-by-step 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)