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Wednesday, 1 April 2015

Jake’s Roof Repair has provided the following data concerning its costs:

Jake’s Roof Repair has provided the following data concerning its costs:


  Fixed Cost
per Month
  Cost per Repair-Hour
  Wages and salaries   $ 20,600        $ 15.00    
  Parts and supplies           $ 7.00    
  Equipment depreciation   $ 2,770        $ 0.45    
  Truck operating expenses   $ 5,790        $ 1.90    
  Rent   $ 4,610               
  Administrative expenses   $ 3,850        $ 0.70    

  

For example, wages and salaries should be $20,600 plus $15.00 per repair-hour. The company expected to work 2,500 repair-hours in May, but actually worked 2,400 repair-hours. The company expects its sales to be $47.00 per repair-hour.
  

Required:
Compute the company’s activity variances for May.


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Explanation:
Jake’s Roof Repair
Activity Variances
For the Month Ended May 31
  Flexible Budget Planning Budget Activity Variances
  Repair-hours (q)   2,400         2,500        
  Revenue ($47.00q)  $ 112,800       $ 117,500    $ 4,700    U
 





 
  Expenses:              
     Wages and salaries ($20,600 + $15.00q)   56,600        58,100     1,500    F
     Parts and supplies ($7.00q)   16,800        17,500     700    F
     Equipment depreciation ($2,770 + $0.45q)   3,850        3,895     45    F
     Truck operating expenses ($5,790 + $1.90q)   10,350        10,540     190    F
     Rent ($4,610)   4,610        4,610     0    None
     Administrative expenses ($3,850 + $0.70q)   5,530        5,600     70    F
 





 
  Total expense   97,740        100,245     2,505    F
 





 
  Net operating income  $ 15,060       $ 17,255    $ 2,195    U
 











 


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