Cicchetti Corporation uses customers served as its measure of activity. The foll
ID: 2598073 • Letter: C
Question
Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December:
Cicchetti Corporation
Comparison of Actual Results to Planning Budget
For the Month Ended December 31
Actual
Results Planning Budget Variances
Customers served 45,000 44,000
Revenue (3.50q) $ 157,200 $ 154,000 $ 3,200 F
Expenses:
Wages and salaries ($24,400 + $1.34q) 84,700 83,360 1,340 U
Supplies ($0.74q) 30,860 32,560 1,700 F
Insurance ($6,300) 6,300 6,300 0
Miscellaneous expense ($5,300 + $.43q) 22,520 24,220 1,700 F
Total expense 144,380 146,440 2,060 F
Net operating income $ 12,820 $ 7,560 $ 5,260 F
Required:
1.
Prepare a report showing the company’s revenue and spending variances for December. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Explanation / Answer
Answer:
Report showing the company’s revenue and spending variances for December
Ciccheti Corporation
Flexible Budget Performance Report Part
For the Month Ended Dec 31
Flexible Budget
Revenue and Spending Variances
Actual Results
Customers served
45000
0
0
45000
Revenue (3.50)
157500
300
U
157200
Expenses:
Wages and salaries ($24,400 + $1.34q)
84700
0
84700
Supplies ($0.74q)
33300
2440
F
30860
Insurance ($6,300)
6300
0
6,300
Miscellaneous expense ($5,300 + $.43q)
24650
2,130
F
22,520
Total expense
148950
4570
F
144380
Net operating income
8550
4270
F
12820
Ciccheti Corporation
Flexible Budget Performance Report Part
For the Month Ended Dec 31
Flexible Budget
Revenue and Spending Variances
Actual Results
Customers served
45000
0
0
45000
Revenue (3.50)
157500
300
U
157200
Expenses:
Wages and salaries ($24,400 + $1.34q)
84700
0
84700
Supplies ($0.74q)
33300
2440
F
30860
Insurance ($6,300)
6300
0
6,300
Miscellaneous expense ($5,300 + $.43q)
24650
2,130
F
22,520
Total expense
148950
4570
F
144380
Net operating income
8550
4270
F
12820