Hemphill Corporation Uses Customers Served as Its Measure of Activity

question 272

Essay

Hemphill Corporation uses customers served as its measure of activity. During June, the company budgeted for 20,000 customers, but actually served 19,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:
Data used in budgeting: Actual results for June: Required:
Prepare the company's flexible budget performance report for June. Label each variance as favorable (F) or unfavorable (U).

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Definitions:

Excess Consideration

The amount paid over and above the fair value of net assets acquired in a business acquisition.

Goodwill

An intangible asset that arises when a business is acquired for more than the sum of its identifiable net assets.

Equity Income

Income earned by an investor from an investment in the stock of a company, typically through dividends and the investment's appreciation in value.

Annual Review

A periodic evaluation process, often yearly, used to assess an individual's or organization's performance, financial state, or the status of a certain project.