Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 37,000 customers, but actually served 27,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:

Revenue: $5.50q

Wages and salaries: $35,200 + $1.70q

Supplies: $1.10q

Insurance: $12,400

Miscellaneous expenses: $8,400 + $0.50q

The company reported the following actual results for February:

Revenue $ 159,800
Wages and salaries $ 70,000
Supplies $ 16,400
Insurance $ 12,400
Miscellaneous expense $ 27,700

Required:

Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U). (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.)

Answer and Explanation:

The preparation of company's flexible budget performance report for February is shown below:-

                                    Arrasmith Corporation

                           Flexible budget performance report

                             For the month ended February

                        Planing     Activity      Flexible   Revenue and   Actual

                        budget       variance    budget   spending           result

                                                                                 variance

Customer

served               37,000       -                  27,000                           27,000

Revenue         $203,500    $55,000 U  $148,500  $11,300 F     $159,800

               (37,000 × $5.50q)              (27,000 × $5.50q)    

Expenses

Wages and

salaries           $98,100      $17,000 F     $81,100     $11,100 F        $70,000

      (37,000 × 1.70) + 35,200)             (27,000 × 1.70) + 35,200

Supplies          $40,700     $11,000 F      $29,700   $13,300 F      $70,000

                             (37,000 × 1.10)       (27,000 × 1.10)

Insurance        $12,400     $0                   $12,400      0                 $12,400

Miscellaneous

expenses        $26,900    $5,000 F       $21,900      $5,800 U      $27,700

             (37,000 × 0.50) + 8,400        (27,000 × 0.50) + 8,400

Total

expenses     $178,100        $33,000 F   $141,500     $18,600 F      $126,500

Net operating

income            $25,400    $22,000 U    $3,400       $29,900 F      $33,300

Therefore to reach net operating income we simply deduct the total expenses from Revenue.

Answer and Explanation:

As per the data given in the question,

ArraSmith Corporation

Flexible budget performance report

                    Planning    Activity      Flexible   Revenue & spending    Actual

                       budget     Variance    budget      Variance                     Results

Customer served 37,000                    27,000                                        27,000

Revenue       $203,500  $55,000 U   $148,500       $11,300 F          $159,800

Expenses:

Wages and Salaries $98,100 $17,000 F $81,100       $11,100 F          $70,000

Supplies      $40,700      $11,000 F     $29,700         $13,300 F         $16,400

Insurance    $12,400           0              $12,400                 0                 $12,400

Miscellaneous expense $26,900 $5,000 F $21,900 $5,800 U       $27,700

Total expense $178,100 $33,000 F $145,100 $18,600 F $126,500

Net Operating Income $25,400 $22,000 U $3,400  $29,900 F   $33,300

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

a.