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Static Budget:

Flexible Budget:

Question:

Refer to the flexible budget. Think about what might have caused the important variances. Make one clear recommendation to management. Remember that your recommendation can always be that no changes be implemented.

A B D E F Budget Actual Variance Size of Variance Activity Levels Service Calls Completed on site Towed Kilometers driven 5.0% 6.1% 22,500 20,250 2,250 472,500 23,630 19,020 4,610 638,000 1,130 F 1,230 U 2,360 U 165,500 U 104.9% 35.0% Revenue Revenue (from repairs) Revenue (from towing) $13,162,500 450,000 $11,386,200 922,000 $1,776,300 U 472,000 F 13.5% 104.9% Variable costs: Gas Parts Payments to drivers 56,700 911,250 2,632,500 69,200 890,600 2,472,600 12,500 U 20,650 F 159,900 F 22.0% 2.3% 6.1% Fixed costs Salaries Depreciation on trucks 80,000 2,000 U 2.4% 82,000 950,000 Rate Activity Base Budget Flexible Budget Actual Variance Size of Variance Activity Levels Service Calls Completed on site Towed Kilometers driven None 90% 10% 21 N/A Service Calls Service Calls Service Calls 22,500 20,250 2,250 472,500 22,500 21,267 2,363 496,230 23,630 19,020 4,610 638,000 1,130 F 2,247 U 2,247 U 141,770 U 5.0% N.1% 99.9% 30.0% Revenue Revenue (from repairs) Revenue (from towing) 650 200 Completed on Site Towed 13,162,500 450,000 12,363,000 922,000 11,386,200 922,000 976,800 U F 7.4% 0.0% 0.12 Variable costs: Gas Parts Payments to drivers Kilometer Completed on Site Completed on Site 45 130 56,700 911,250 2,632,500 76,560 855,900 2,472,600 69,200 890,600 2,472,600 7,360 F 34,700 U 13.0% 3.8% 0.0% Fixed costs Salaries Depreciation on trucks 2,000 F 2.4% N/A N/A 82,000 950,000 80,000 950,000 950,000

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