Arrasmith Corporation Uses Customers Served as Its Measure of Activity

question 225

Essay

Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 35,200 customers, but actually served 32,800 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $3.70qWages and salaries: $33,400 + $1.16qSupplies: $0.56qInsurance: $10,600Miscellaneous expenses: $6,600 + $0.32qThe 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).

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Definitions:

'>' Symbol

A mathematical symbol denoting that the value on the left is greater than the value on the right.

Alternative Hypothesis

The hypothesis that proposes a difference or effect, in contrast to the null hypothesis, which asserts no effect or relationship.

One-tailed

Refers to a type of statistical test where the hypothesis specifies a direction of the expected difference or relationship.

Standard Deviation

An indicator of how much the values in a dataset spread out or vary from one another.