Shaak Corporation Uses Customers Served as Its Measure of Activity

question 121

Essay

Shaak Corporation uses customers served as its measure of activity.The company bases its budgets on the following information: Revenue should be $3.20 per customer served.Wages and salaries should be $21,000 per month plus $0.80 per customer served.Supplies should be $0.70 per customer served.Insurance should be $5,300 per month.Miscellaneous expenses should be $3,100 per month plus $0.10 per customer served.

The company reported the following actual results for October:
Required:
Prepare a report showing the company's revenue and spending variances for October.Label each variance as favorable (F)or unfavorable (U).

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Definitions:

Expected Monetary Value(EMV)

A method employed in making decisions that calculates the mean result in situations where the future holds potential but uncertain events.

Expected Monetary Value

The predicted average amount of money gained or lost from an investment or decision, calculated by considering all possible outcomes and their probabilities.

Gross Profits

Total revenue of a company minus the cost of goods sold.

Payoff Table

A tabular representation of the outcomes (payoffs) of different decisions under various states of nature.