Mcdougald Corporation Is a Service Company That Measures Its Output

question 348

Multiple Choice

Mcdougald Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for March. When the company prepared its planning budget at the beginning of March, it assumed that 21 customers would have been served. However, 26 customers were actually served during March.The spending variance for "Employee salaries and wages" for March would have been closest to:

• A) $1,200 F
• B) $3,800 F
• C) $3,800 U
• D) $1,200 U

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Definitions:

Accounts Written Off

This refers to the process where businesses remove uncollectible accounts receivable from their accounting records because payment is no longer expected.

Note Dishonored

A promissory note that has not been paid by the issuer at maturity.

Allowance for Doubtful Accounts

An accounting provision made for accounts receivable that might not be collected, representing a business's estimate of noncollectable amounts.

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services provided on credit.