Arrasmith Corporation Uses Customers Served as Its Measure of Activity

question 278

Essay

Arrasmith Corporation uses customers served as its measure of activity.During February,the company budgeted for 35,000 customers,but actually served 34,000 customers.The company uses the following revenue and cost formulas in its budgeting,where q is the number of customers served:
Revenue:
$3.50q
Wages and salaries:
$33,200 + $1.10q
Supplies:
$0.50q
Insurance:
$10,400
Miscellaneous expense:
$6,400 + $0.30q
The 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:

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