Camcam Corporation Uses Customers Served as Its Measure of Activity

question 277

Essay

Camcam Corporation uses customers served as its measure of activity.During July,the company budgeted for 26,000 customers,but actually served 30,000 customers.The company uses the following revenue and cost formulas in its budgeting,where q is the number of customers served:
Revenue: $4.90q
Wages and salaries: $34,400 + $1.60q
Supplies: $1.00q
Insurance: $8,500
Miscellaneous expense: $5,600 + $0.20q
The company reported the following actual results for July: Required:
Prepare a report showing the company's revenue and spending variances for July.Label each variance as favorable (F)or unfavorable (U).

---

Definitions:

Specialization

A process wherein individuals or businesses focus on producing a limited range of goods or services to gain greater efficiency and productivity.

Trade

The swapping of goods, services, or both among two or more entities.

Opportunity Cost

The loss incurred from potential opportunities when one choice is made over others.

Absolute Advantage

A condition where a country, entity, or individual can produce a good or service more efficiently than competitors using the same amount of resources.