Prestridge Corporation Is a Service Company That Measures Its Output

question 82

Multiple Choice

Prestridge 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 August. When the company prepared its planning budget at the beginning of August, it assumed that 31 customers would have been served. However, 29 customers were actually served during August.The variance for net operating income in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for August would have been closest to:

• A) $4,100 U
• B) $4,100 F
• C) $1,100 U
• D) $1,100 F

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Definitions:

Broad Banding

A compensation strategy that consolidates numerous pay grades into fewer wide bands, offering flexibility in job roles and pay.

Labour Costs

The total expenses associated with employing labor, including wages, salaries, benefits, and other related costs.

Point Method

A systematic approach used in job evaluation to quantify the value of a job by assigning points based on various factors like skill, effort, and responsibility.

Factor Overlaps

Situations where different elements or variables in a study or analysis share common characteristics, leading to redundancy or confusion.