AirQual Test Corporation provides onsite air quality testing

AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:

The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,600 plus $34 per job, and the actual mobile lab operating expenses for February were $9,540. The company expected to work 150 jobs in February, but actually worked 158 jobs.

Required:

Prepare a flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February. (Indicate the effect of each variance by selecting \"F\" for favorable, \"U\" for unfavorable, and \"None\" for no effect (i.e., zero variance). Input all amounts as positive values.)

	Fixed Component per Month	Variable Component per Job	Actual Total for February
Revenue				$	280		$	39,250
Technician wages	$	8,400					$	8,250
Mobile lab operating expenses	$	4,600		$	34		$	9,540
Office expenses	$	2,300		$	4		$	2,750
Advertising expenses	$	1,610					$	1,680
Insurance	$	2,870					$	2,870
Miscellaneous expenses	$	960		$	1		$	415

Solution

Actual Revenue and spending variances Flexible budget Activity variances Planning budget Jobs worked 158 158 150 Revenue 39250 4990 U 44240 2240 F 42000 Expenses: Technician wages 8250 150 F 8400 0 None 8400 Mobile lab operating expenses 9540 432 F 9972 272 U 9700 Office expenses 2750 182 F 2932 32 U 2900 Advertising expenses 1680 70 U 1610 0 None 1610 Insurance 2870 0 None 2870 0 None 2870 Miscellaneous expenses 415 703 F 1118 8 U 1110 Total expenses 25505 1397 F 26902 312 U 26590 Net operating income 13745 3593 U 17338 1928 F 15410