Exam 9: Flexible Budgets and Performance Analysis

Roberds 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 March,the school budgeted for 1,710 students and 68 courses.The school's income statement showing the actual results for the month appears below: Required: Prepare a flexible budget performance report showing both the school's activity variances and revenue and spending variances for March.Label each variance as favorable (F)or unfavorable (U).

An activity variance is the difference between an actual revenue or cost and the revenue or cost in the flexible budget that is adjusted for the actual level of activity of the period.

Paulis 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 February, the kennel budgeted for 2,500 tenant-days, but its actual level of activity was 2,480 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Actual results for February: -The net operating income in the planning budget for February would be closest to:

Wember Catering uses two measures of activity,jobs and meals,in the cost formulas in its budgets and performance reports.The cost formula for catering supplies is $400 per month plus $82 per job plus $10 per meal.A typical job involves serving a number of meals to guests at a corporate function or at a host's home.The company expected its activity in September to be 20 jobs and 144 meals,but the actual activity was 16 jobs and 141 meals.The actual cost for catering supplies in September was $3,100.The catering supplies in the planning budget for September would be closest to:

Teel Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $8,850 per month plus $400 per press run plus $950 per book set-up. The company expected its activity in July to be 204 press runs and 111 book set-ups, but the actual activity was 201 press runs and 110 book set-ups. The actual cost for wages and salaries in July was $193,780. -The wages and salaries in the flexible budget for July would be closest to:

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 "Employee salaries and wages" for October would have been closest to:

Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Actual results for February: -The medical supplies in the flexible budget for February would be closest to:

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 direct labor in March would be closest to:

Kaina Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits. The clinic 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:

Dure Corporation's cost formula for its selling and administrative expense is $24,500 per month plus $1 per unit. For the month of July, the company planned for activity of 7,200 units, but the actual level of activity was 7,160 units. The actual selling and administrative expense for the month was $31,460. -The selling and administrative expense in the flexible budget for July would be closest to:

Gayner Corporation is an oil well service company that measures its output by the number of wells serviced.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for November. When the company prepared its planning budget at the beginning of November,it assumed that 30 wells would have been serviced.However,34 wells were actually serviced during November. The spending variance for "Servicing materials" for November would have been closest to:

Shiigi Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for May is to be based on 3,300 meals.The diner's director has provided the following cost data to use in the budget: groceries,$3.80 per meal; kitchen operations,$4,600 per month plus $1.25 per meal; administrative expenses,$3,800 per month plus $0.40 per meal; and fundraising expenses,$1,700 per month. Required: Prepare the diner's budget for the month of May.The budget will only contain the costs listed above; no revenues will be on the budget.

Klingshirn 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 December. When the company prepared its planning budget at the beginning of December,it assumed that 25 customers would have been served.However,23 customers were actually served during December. Required: Prepare a performance report showing the company's activity and revenue and spending variances for December.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

Moncrief Corporation bases its budgets on machine-hours. The company's static planning budget for July appears below: Actual results for the month were: -The spending variance for supplies costs in the flexible budget performance report for the month should be:

If the actual level of activity is 4% more than planned,then the costs in the static budget should be increased by 4% before comparing them to actual costs.

Knapper 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 January, the kennel budgeted for 2,700 tenant-days, but its actual level of activity was 2,740 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The facility expenses in the flexible budget for January would be closest to:

Tessmer 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 January, the kennel budgeted for 3,100 tenant-days, but its actual level of activity was 3,090 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: -The facility expenses in the flexible budget for January would be closest to:

Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,290 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Actual results for November: -The spending variance for medical supplies in November would be closest to:

Teel Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $8,850 per month plus $400 per press run plus $950 per book set-up. The company expected its activity in July to be 204 press runs and 111 book set-ups, but the actual activity was 201 press runs and 110 book set-ups. The actual cost for wages and salaries in July was $193,780. -The wages and salaries in the planning budget for July would be closest to:

Prestridge 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 August. When the company prepared its planning budget at the beginning of August, it assumed that 31 customers would have been served. However, 29 customers were actually served during August. -The spending variance for total expenses for August would have been closest to: