Asked by Mathu Vicky on Jun 12, 2024
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Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 35,000 customers, but actually served 34,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $3.50qWages and salaries: $33,200 + $1.10qSupplies: $0.50qInsurance: $10,400Miscellaneous expense: $6,400 + $0.30qThe company reported the following actual results for February:
Required:Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U).
Customers Served
The total number of customers who receive service or products from a business within a given time period.
Revenue
The total amount of income generated from the sale of goods or services before any expenses are subtracted.
Spending Variances
Differences between the actual spending and the budgeted or planned spending in a given period, often analyzed in cost and managerial accounting.
- Identify variances within the budgeting process, analyzing whether they signify advantageous outcomes or setbacks.
- Analyze the economic wellbeing using flexible budget documentation.
- Invoke cost and revenue calculations for the drafting of budget reports.
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Learning Objectives
- Identify variances within the budgeting process, analyzing whether they signify advantageous outcomes or setbacks.
- Analyze the economic wellbeing using flexible budget documentation.
- Invoke cost and revenue calculations for the drafting of budget reports.
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