Arrasmith Corporation Uses Customers Served as Its Measure of Activity

Essay

Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 35,000 customers, but actually served 34,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $3.50qWages and salaries: $33,200 + $1.10qSupplies: $0.50qInsurance: $10,400Miscellaneous expense: $6,400 + $0.30qThe company reported the following actual results for February:
Required:Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U).