Question

Jordan Educational Services had budgeted its training service charge at $73 per hour. The company planned to provide 34,000 hours of training services during Year 3. By lowering the service charge to $58 per hour, the company was able to increase the actual number of hours to 35,400. Required Determine the sales volume variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) Determine the flexible budget variance, and indicate whether it is favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).) Did lowering the price of training services increase revenue

Answer 1

JORDAN EDUCATIONAL SERVICES

a. sales volume variance = (budgeted hours - actual hours )* standard price

= ( 34,000 - 35,400)*$73

= $102,200 F.

b. Flexible budget variance = flexible budget - actual result

= (35,400*$78) - (35,400*$58)

= $2,761,200 - $2,053,200

= $708,000U

c. Lowering of training services doesnot increase the revenue because the budgeted revenue is (34,000*$78) $2,652,000 while the actual revenue generated after the reduction is $2,053,200.

Step-by-step explanation: