Felicetti Corporation Bases Its Budgets on the Activity Measure Customers

question 147

Essay

Felicetti Corporation bases its budgets on the activity measure customers served.During November,the company planned to serve 21,000 customers.The company has provided the following data concerning the formulas it uses in its budgeting:
The company has also furnished its income statement for November
Required:
Prepare a report showing the company's activity variances for November.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

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Definitions:

Annual Fixed Cost

The total of all business expenses that remain constant regardless of any change in production levels or sales volume over a year.

Total Output

The aggregate quantity of goods or services produced by an economy, sector, or production process over a specific period.

Barbershop

A place of business where people, typically men, go to get haircuts and often beard trims or shaves.

Average Total Cost

The total cost of production divided by the quantity produced, including both fixed and variable costs, representing the per unit cost of production.