Cosden Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fixed cost per month Variable cost per wellRevenue $4,700Salaries and Wages $41,300 $1,000Service Materials $600Other Expenses $40,200When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 31 wells were actually serviced during May. Prepare the Planning Budget, Flexible Budget and variance analysis for Cosden Corporation.

Explanation:

Fixed cost per month Variable cost per well Revenue $4,700 Salaries and Wages $41,300 $1,000 Service Materials $600 Other Expenses $40,200 When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 31 wells were actually serviced during May. Prepare the Planning Budget, Flexible Budget and variance analysis for Cosden Corporation.

                       Planning Budget    Flexible budget      variance- Fav/(Unfav)

Revenue                 4700*29               4700*31                        9400

                                = 136300             = 145700

Less:    

Salaries and wages  41300+1000*29  41300+1000*31          (2000)

                                     = 70300            = 72300

Service material      600*29 = 17400        600*31 = 18600     (1200)

Other expense         40200                    40200                        0

Profit                       8400                         14600                        6200

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