Varcoe Corporation Bases Its Budgets on the Activity Measure Customers

question 218

Essay

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).

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Definitions:

Discount

A reduction applied to the normal selling price of goods or services, typically for the purpose of enticing customers or accelerating sales.

Journal Entry

A record in accounting that represents a transaction or adjustment affecting at least two accounts, which is necessary to keep the financial statements accurate.

Effective-Interest Method

An accounting technique used to amortize the discount or premium on bonds payable or receivable over the life of the bond, reflecting the bond's yield.