Rients Corporation Is a Service Company That Measures Its Output

question 291

Multiple Choice

Rients 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 October. When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October.The revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for October would have been closest to:

• A) $23,000 U
• B) $23,000 F
• C) $2,500 F
• D) $2,500 U

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Definitions:

Beginning Inventory

The amount of merchandise prepared for sale at the start of a fiscal period.

Average Inventory

The mean value of the inventory over a specific time period, calculated by averaging the inventory levels at various times.

Ending Inventory

The overall price of inventory on offer at the termination of an accounting term.

Beginning Inventory

The initial worth of a firm's stock before any transactions, such as buys or sales, happen at the beginning of an accounting cycle.