Thorman Corporation Is a Service Company That Measures Its Output

question 358

Essay

Thorman 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 35 customers would have been served.However, 39 customers were actually served during August.

Required:
Prepare a report showing the company's revenue and spending variances for August.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

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Definitions:

Agency Relationships

A legal relationship in which one party (the agent) acts on behalf of another party (the principal) in dealings with third parties.

Third Party

An entity not directly involved in a transaction or agreement but may be affected by it or have an interest in its outcome.

Business Transactions

Financial activities or agreements carried out between parties, often involving the exchange of goods, services, money, or property.

Principal

In a contractual relationship, the principal is the party who authorizes an agent to act on their behalf.