Chapter 09s (1)

# Flexible budget cost actual cost the difference is a

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Flexible budget cost Actual cost The difference is a spending variance.

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9-15 Revenue and Spending Variances Revenue and Revenue/Cost Flexible Actual Spending Formulas Budget Results Variances Number of lawns (Q) 550 550 Revenue (\$75Q) 41,250 \$ 43,000 \$ 1,750 \$ F Expenses: Wages and salaries (\$5,000 + \$30Q) 21,500 \$ 23,500 \$ 2,000 \$ U Gasoline and supplies (\$9Q) 4,950 5,100 150 U Equipment maintenance (\$3Q) 1,650 1,300 350 F Office and shop utilities (\$1,000) 1,000 950 50 F Office and shop rent (\$2,000) 2,000 2,000 - Equipment Depreciation (\$2,500) 2,500 2,500 - Insurance (\$1,000) 1,000 1,200 200 U Total expenses 34,600 36,550 1,950 U Net operating income 6,650 \$ 6,450 \$ 200 \$ U Larry's Lawn Service For the Month Ended June 30 Larry’s Flexible Budget Compared with the Actual Results \$1,750 favorable revenue variance
9-16 Revenue and Revenue/Cost Flexible Actual Spending Formulas Budget Results Variances Number of lawns (Q) 550 550 Revenue (\$75Q) 41,250 \$ 43,000 \$ 1,750 \$ F Expenses: Wages and salaries (\$5,000 + \$30Q) 21,500 \$ 23,500 \$ 2,000 \$ U Gasoline and supplies (\$9Q) 4,950 5,100 150 U Equipment maintenance (\$3Q) 1,650 1,300 350 F Office and shop utilities (\$1,000) 1,000 950 50 F Office and shop rent (\$2,000) 2,000 2,000 - Equipment Depreciation (\$2,500) 2,500 2,500 - Insurance (\$1,000) 1,000 1,200 200 U Total expenses 34,600 36,550 1,950 U Net operating income 6,650 \$ 6,450 \$ 200 \$ U Larry's Lawn Service For the Month Ended June 30 Larry’s Flexible Budget Compared with the Actual Results Revenue and Spending Variances Spending  variances

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9-17 Now, let’s use              budgeting concepts to combine the revenue and  spending variances reports for Larry’s  Lawn Service.        A Performance Report Combining Activity  and Revenue and Spending Variances
9-18 Revenue and Revenue/Cost Planning Activity Flexible Spending Actual Formulas Budget Variances Budget Variances Results Number of lawns (Q) 500 550 550 Revenue (\$75Q) 37,500 \$ 3,750 \$ F 41,250 \$ 1,750 \$ F 43,000 \$ Expenses: Wages and salaries (\$5,000 + \$30Q) 20,000 \$ 1,500 \$ U 21,500 \$ 2,000 \$ U 23,500 \$ Gasoline and supplies (\$9Q) 4,500 450 U 4,950 150 U 5,100 Equipment maintenance (\$3Q) 1,500 150 U 1,650 350 F 1,300 Office and shop utilities (\$1,000) 1,000 - 1,000 50 F 950 Office and shop rent (\$2,000) 2,000 - 2,000 - 2,000 Equipment Depreciation (\$2,500) 2,500 - 2,500 - 2,500 Insurance (\$1,000) 1,000 - 1,000 200 U 1,200 Total expenses 32,500 2,100 U 34,600 1,950 U 36,550 Net operating income 5,000 \$ 1,650 \$ F 6,650 \$ 200 \$ U 6,450 \$ Larry's Lawn Service For the Month Ended June 30 Flexible Budget Performance Report A Performance Report Combining Activity  and Revenue and Spending Variances

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9-19 A Performance Report Combining Activity  and Revenue and Spending Variances Revenue and Revenue/Cost Planning Activity Flexible Spending Actual Formulas Budget Variances Budget Variances Results Number of lawns (Q) 500 550 550 Revenue (\$75Q) 37,500 \$ 3,750 \$ F 41,250 \$ 1,750 \$ F 43,000 \$ Expenses: Wages and salaries (\$5,000 + \$30Q) 20,000 \$ 1,500 \$ U 21,500 \$ 2,000 \$ U 23,500 \$ Gasoline and supplies (\$9Q) 4,500 450 U 4,950 150 U 5,100 Equipment maintenance (\$3Q) 1,500 150 U 1,650 350 F 1,300 Office and shop utilities (\$1,000) 1,000 - 1,000 50 F 950 Office and shop rent (\$2,000) 2,000 - 2,000 - 2,000 Equipment Depreciation (\$2,500) 2,500 - 2,500 - 2,500 Insurance (\$1,000) 1,000 - 1,000 200 U 1,200 Total expenses 32,500 2,100 U 34,600 1,950 U 36,550 Net operating income 5,000 \$ 1,650 \$ F 6,650 \$ 200 \$ U 6,450 \$ Larry's Lawn Service For the Month Ended June 30 Flexible Budget Performance Report 50 lawns × \$75 per lawn 50 lawns × \$30 per lawn
9-20 Revenue and Revenue/Cost Planning Activity Flexible Spending Actual Formulas Budget

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