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Problem
Lineback Corporation bases its budgets on the activity measure customers served. During April, the company planned to serve 33,000 customers, but actually served 30,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:
Revenue: $2.60q
Wages and salaries: $26,000 + $0.70q
Supplies: $0.50q
Insurance: $5,400
Miscellaneous expense: $2,700 + $0.20q
Required: Prepare a report showing the company's activity variances for April. Indicate in each case whether the variance is favorable (F) or unfavorable (U).
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