Financial Acconting exercises: Flexible Budgets - Assignment Example

Flexible Budgets Flexible Budgets Exercise 9 Gator Drivers Flexible Budget Budgeted Actual Driving Hours 200 190 Revenue 76,000 72,200 U$$Expenses:Wages and Salaries 38,000 36,700 FSupplies 1,000 950 FEquipment rental 7,700 7,440 FInsurance 4,200 4,200 -Miscellaneous 840 825 -Total Expenses 51,740 50,115 FNet Operating Income 24,260 22,085 UExercise 9-6The variance report is useful for evaluating if The Exterminator Inc. is able to control its revenues and costs. It can be clearly noted that the company has not able to been to control its revenues as the actual results are unfavorable.

Despite increase in jobs the company did not generate equal or more revenues, which implies that the company has not been able to charge its clients the budgeted rate for each job. Furthermore, the company has not been able to control its expenses including mobile team operating costs, exterminating supplies, advertising, and dispatching costs. These unfavorable results have led to a decrease in the company’s net operating income. However, this variance report does not indicate reasons why these results have been generated.

Exercise 9-14Machine Hours 4,000 Pierr Manufacturing Inc.Planning BudgetFor the Month Ending July 31$Direct Materials ($5.70Hr) 22,800 Direct Labor 42,800 Supplies ($0.20Hr) 800 Utilities ($1,600+$0.15Hr) 2,200 Depreciation 14,900 Insurance 14,000 Total Costs 97,500