Turiano Corporation bases its budgets on machine-hours. The company's static planning budget for November appears below:
- Budgeted number of machine-hours 9500
- Budgeted variable costs:
- Supplies (@3.70 per machine-hour) $35,150
- Power (@2.40 per machine-hour) $22,800
- Budgeted fixed costs:
- Salaries 46,550
- Equipment depreciation 31,350
- Total Cost $135,850
Required:
Prepare a flexible budget for 10,400 machine-hours per month.
2.Ruvolo Jeep Tours operates jeep tours in the heart of the Colorado Rockies. The company bases its budgets on two measures of activity (i.e., cost drivers), namely guests and jeeps. One vehicle used in one tour on one day counts as a jeep. Each jeep has one tour guide. The company uses the following data in its budgeting:
- Fixed element Variable element Variable element
- per month per month per jeep
- Revenue $0 $120 $0
- Tour guide wages $0 $0 $167
- Vehicle Expenses $4,600 $10 $41
- Administrative expenses $1,300 $1 $0
In February, the company budgeted for 436 guests and 162 jeeps. The company's income statement showing the actual results for the month appears below:
Ruvolo Jeep Tours Income Statement For the month ended February 28
- Actual guests 461
- Actual jeeps 159
- Revenue $54,020
- Expenses:
- Tour guide wages 25,913
- Vehicle expenses 15,909
- Administrative expenses 1,751
- Total expense 43,573
- Net operating income $10,447
Required: Prepare a report showing the company's revenue and spending variances for February. Label each variance as favorable (F) or unfavorable (U).