Larry's Lawn Service Larry's Lawn Service provides lawn care in a planned community where all lawns...
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Larry's Lawn Service Larry's Lawn Service provides lawn care in a planned community where all lawns are approximately the same size. At the end of May, Larry prepared his June budget based on mowing 500 lawns. Since all of the lawns are similar in size, Larry felt that the number of lawns mowed in a month would be the best way to measure overall activity for his business. A. A (static) vs. actual results Revenue Expenses: planning budget Number of lawns (Q) Larry's Lawn Service For the Month Ended June 30 Wages and salaries Gasoline and supplies Equipment maintenance Office and shop utilities Office and shop rent Equipment Depreciation Insurance Questions Total expenses Net operating income Revenue/Cost Formulas ($75Q) ($5,000+ $30Q) $ ($9Q) ($3Q) ($1,000) ($2,000) ($2,500) ($1,000) Planning Budget $ 37,500 $ 500 20,000 4,500 1,500 1,000 2,000 2,500 1,000 32,500 5,000 Larry's Lawn Service For the Month Ended June 30 Number of lawns Revenue Expenses: Wages and salaries Gasoline and supplies Equipment maintenance Office and shop utilities Office and shop rent Equipment Depreciation Insurance Total expenses Net operating income $ $ $ Actual Results 1 What are fixed expenses? What are variable expenses? 2 What is the planned net income? What is the actual income? 3 Why is there a difference? 4 Is this because the manager sells more (i.e., 50 lawns service), or because they use gas and supplies more efficiently? 550 43,000 23,500 5,100 1,300 950 2,000 2,500 1,200 36,550 6,450 Compare actual and planning (Actual Planning budget) Larry's Lawn Service Larry's Lawn Service provides lawn care in a planned community where all lawns are approximately the same size. At the end of May, Larry prepared his June budget based on mowing 500 lawns. Since all of the lawns are similar in size, Larry felt that the number of lawns mowed in a month would be the best way to measure overall activity for his business. A. A (static) vs. actual results Revenue Expenses: planning budget Number of lawns (Q) Larry's Lawn Service For the Month Ended June 30 Wages and salaries Gasoline and supplies Equipment maintenance Office and shop utilities Office and shop rent Equipment Depreciation Insurance Questions Total expenses Net operating income Revenue/Cost Formulas ($75Q) ($5,000+ $30Q) $ ($9Q) ($3Q) ($1,000) ($2,000) ($2,500) ($1,000) Planning Budget $ 37,500 $ 500 20,000 4,500 1,500 1,000 2,000 2,500 1,000 32,500 5,000 Larry's Lawn Service For the Month Ended June 30 Number of lawns Revenue Expenses: Wages and salaries Gasoline and supplies Equipment maintenance Office and shop utilities Office and shop rent Equipment Depreciation Insurance Total expenses Net operating income $ $ $ Actual Results 1 What are fixed expenses? What are variable expenses? 2 What is the planned net income? What is the actual income? 3 Why is there a difference? 4 Is this because the manager sells more (i.e., 50 lawns service), or because they use gas and supplies more efficiently? 550 43,000 23,500 5,100 1,300 950 2,000 2,500 1,200 36,550 6,450 Compare actual and planning (Actual Planning budget)
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1 Fixed expenses are expenses that do not vary with the level of activity or the number of lawns mow... View the full answer
Related Book For
Auditing An International Approach
ISBN: 978-0071051415
6th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley
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