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Jake's Roof Repair Activity Variance Report

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Jake's Roof Repair has provided the following data concerning its costs:
Fixed Cost
per Month
Cost per
Repair-Hour
Wages and salaries . . . . . . . . . . . . . . . . $23,200 $16.30
Parts and supplies . . . . . . . . . . . . . . . . . $8.60
Equipment depreciation . . . . . . . . . . . . $1,600 $0.40
Truck operating expenses . . . . . . . . . . . $6,400 $1.70
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,480
Administrative expenses . . . . . . . . . . . . $4,500 $0.80
Fixed Cost
per Month
Cost per
Machine-Hour
Direct materials . . . . . . . . . . . . . . . . . $4.25
Direct labor . . . . . . . . . . . . . . . . . . . . $36,800
Supplies . . . . . . . . . . . . . . . . . . . . . . . $0.30
Utilities . . . . . . . . . . . . . . . . . . . . . . . . $1,400 $0.05
Depreciation . . . . . . . . . . . . . . . . . . . $16,700
Insurance . . . . . . . . . . . . . . . . . . . . . . $12,700
For example, utilities should be $1,400 per month plus $0.05 per machine-hour. The company
expects to work 5,000 machine-hours in June. Note that the company's direct labor is a fixed cost.
Required:
Prepare the company's planning budget for manufacturing costs for June.
EXERCISE 9-10 Flexible Budget [LO9-1]
Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility
near Montreal. The following table provides data concerning the company's costs:
For example, wages and salaries should be $23,200 plus $16.30 per repair-hour. The company
expected to work 2,800 repair-hours in May, but actually worked 2,900 repair-hours. The company
expects its sales to be $44.50 per repair-hour.
Required:
Prepare a report showing the company's activity variances for May.

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Solution Summary

The solution shows the calculations of the flexible and planning budget amounts as well as the calculation and classification of variances (favorable and unfavorable)

Solution provided by:
Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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