Exam 9: Flexible Budgets and Performance Analysis

Bracken Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,140 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for September: Data used in budgeting: Actual results for September: -The overall revenue and spending variance (i.e.,the variance for net operating income in the revenue and spending variance column on the flexible budget performance report)for September would be closest to:

Medlar Corporation's static planning budget for June appears below. The company bases its budgets on machine-hours. In June, the actual number of machine-hours was 9,300, the actual supplies cost was $19,760, the actual power cost was $35,720, the actual salaries cost was $27,130, and the actual equipment depreciation was $39,430. -The spending variance for power cost in the flexible budget performance report for the month should be:

Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October. When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October. -The spending variance for "Travel expenses" for October would have been closest to:

Lenci Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,100 units, but its actual level of activity was 5,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Actual results for May: -The revenue variance for May would be closest to:

Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets.

Schoening Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for January. When the company prepared its planning budget at the beginning of January, it assumed that 40 containers would have been refurbished. However, 38 containers were actually refurbished during January. -The total expenses in the flexible budget for January would have been closest to:

Billafuerte Jeep Tours operates jeep tours in the heart of the Colorado Rockies.The company bases its budgets on two measures of activity (i.e.,cost drivers),namely guests and jeeps.One vehicle used in one tour on one day counts as a jeep.Each jeep has one tour guide.The company uses the following data in its budgeting: In July,the company budgeted for 496 guests and 233 jeeps.The actual activity for the month was 481 guests and 238 jeeps. Required: Prepare the company's planning budget for July.

During June,Tarras Corporation plans to serve 36,000 customers.The company uses the following revenue and cost formulas in its budgeting,where q is the number of customers served: Revenue: $3.50q Wages and salaries: $35,100 + $0.90q Supplies: $0.70q Insurance: $8,500 Miscellaneous expense: $4,100 + $0.30q Required: Prepare the company's planning budget for June.

Brong Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for March. When the company prepared its planning budget at the beginning of March, it assumed that 22 containers would have been refurbished. However, 18 containers were actually refurbished during March. -The spending variance for total expenses for March would have been closest to:

Rossean Tech is a for-profit vocational school.The school bases its budgets on two measures of activity (i.e.,cost drivers),namely student and course.The school uses the following data in its budgeting: In October,the school budgeted for 1,400 students and 127 courses.The actual activity for the month was 1,500 students and 129 courses. Required: Prepare a report showing the school's activity variances for October.Label each variance as favorable (F)or unfavorable (U).

Fixed costs should usually be included in performance reports because fixed costs are generally controllable.

Rogstad Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 6,700 units, but its actual level of activity was 6,670 units. The company has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for selling and administrative expenses in March would be closest to:

Manter Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,900 units, but its actual level of activity was 6,940 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June: Data used in budgeting: Actual results for June: -The direct materials in the flexible budget for June would be closest to:

Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Actual results for December: -The occupancy expenses in the flexible budget for December would be closest to:

A flexible budget report should exclude variable costs because they can be expected to change with a change in the level of activity.

A budget that is based on the actual activity of a period is known as a:

Meinke Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During April, the kennel budgeted for 3,700 tenant-days, but its actual level of activity was 3,680 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting: Actual results for April: -The spending variance for food and supplies in April would be closest to:

Magliacane Corporation is a service company that measures its output by the number of customers served.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of February,it assumed that 39 customers would have been served.However,35 customers were actually served during February. The revenue in the company's flexible budget for February would have been closest to:

Gordin Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During May, the kennel budgeted for 3,000 tenant-days, but its actual level of activity was 3,020 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Actual results for May: -The activity variance for administrative expenses in May would be closest to:

Grohs Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During December, the kennel budgeted for 2,500 tenant-days, but its actual level of activity was 2,530 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The total expenses in the flexible budget for October would have been closest to: