Adger Corporation is a service company that measures its out

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

Fixed Element
per Month

Variable Element per Customer Served

Actual Total
for May

Revenue

$

5,600

$

178,000

Employee salaries and wages

$

63,000

$

1,000

$

96,500

Travel expenses

$

550

$

15,900

Other expenses

$

42,000

$

39,800

When preparing its planning budget the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 customers.

11. What amount of employee salaries and wages would be included in Adger’s planning budget for May?

12. What amount of travel expenses would be included in Adger’s planning budget for May?

13. What amount of other expenses would be included in Adger’s planning budget for May?

14. What activity variance would Adger report in May with respect to its revenue?

15. What activity variances would Adger report with respect to each of its expenses for May?

	Fixed Element per Month	Variable Element per Customer Served	Actual Total for May
Revenue			$	5,600		$	178,000
Employee salaries and wages	$	63,000	$	1,000		$	96,500
Travel expenses			$	550		$	15,900
Other expenses	$	42,000				$	39,800

Solution

11) Salaries and wages 63000+30*1000 93000 answer 12) Travel expense 30*550 16500 answer 13) other expense $42,000 answer 14) Activity variance flexible planned Activity variance budget budget Revenue 196000 168000 28000 F 15) Activity variance to expenses flexible planned Activity variance budget budget Employees salaries 98000 93000 5000 U travel expense 19250 16500 2750 U other expense 42,000 42,000 0 N