Guy Corporation Uses Customers Served as Its Measure of Activity

question 247

Essay

Guy Corporation uses customers served as its measure of activity. During January, the company budgeted for 32,000 customers, but actually served 35,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:
Revenue: $4.20q
Wages and salaries: $33,900 + $1.40q
Supplies: $0.60q
Insurance: $10,000
Miscellaneous: $7,000 + $0.40q
The company reported the following actual results for January:
Required:
Prepare the company's flexible budget performance report for January. Label each variance as favorable (F) or unfavorable (U).

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Definitions:

Product Markets

Markets where finished goods and services are bought and sold.

Money Flow

refers to the movement of money within the economy, covering the circulation of money between individuals, businesses, and governments.

Circular-Flow Diagram

A visual model that shows how money moves through an economy, typically between households and firms.

Firm

An organization or business entity engaged in commercial, industrial, or professional activities, typically with the aim of generating profit.