Exam 9: Flexible Budgets and Performance Analysis

Virgen 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 3,700 tenant-days, but its actual level of activity was 3,690 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 net operating income in the planning budget for May would be closest to:

Cryan 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 May,the company budgeted for 447 guests and 152 jeeps.The company's income statement showing the actual results for the month appears below: Required: Prepare a report showing the company's revenue and spending variances for May.Label each variance as favorable (F)or unfavorable (U).

Stegemann 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 May. When the company prepared its planning budget at the beginning of May, it assumed that 27 containers would have been refurbished. However, 29 containers were actually refurbished during May. -The amount shown for "Other expenses" in the planning budget for May would have been closest to:

Dinham 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 March, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: -The spending variance for food and supplies in March would be closest to:

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 "Other expenses" for March would have been closest to:

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: -The total cost at the activity level of 9,400 patient-visits per month should be:

Felicetti Corporation bases its budgets on the activity measure customers served.During November,the company planned to serve 21,000 customers.The company has provided the following data concerning the formulas it uses in its budgeting: The company has also furnished its income statement for November Required: Prepare a report showing the company's activity variances for November.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

To help assess how well a manager has controlled costs,actual costs should be compared to what the costs should have been for the actual level of activity.

Pattison 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 May,it assumed that 20 customers would have been served.However,17 customers were actually served during May. The activity variance for "Travel expenses" for May would have been closest to:

A revenue variance is unfavorable if the revenue in the static planning budget is less than the revenue in the flexible budget.

Rhed 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 3,700 tenant-days, but its actual level of activity was 3,650 tenant-days. The kennel 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 spending variance for facility expenses in December would be closest to:

Varriano Corporation bases its budgets on the activity measure customers served.During October,the company planned to serve 31,000 customers,but actually served 34,000 customers.The company has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare a report showing the company's activity variances for October.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

Lochner 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 June. When the company prepared its planning budget at the beginning of June, it assumed that 24 wells would have been serviced. However, 26 wells were actually serviced during June. -The revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for June would have been closest to:

Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,000 client-visits, but its actual level of activity was 2,010 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for personnel expenses in July would be closest to:

Skoff 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 35 containers would have been refurbished. However, 32 containers were actually refurbished during March. -The activity variance for "Refurbishing materials" for March would have been closest to:

Skoff 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 35 containers would have been refurbished. However, 32 containers were actually refurbished during March. -The spending variance for "Refurbishing materials" for March would have been closest to:

In a flexible budget,when the activity declines,the total variable cost also declines.

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 activity variance for "Refurbishing materials" for January would have been closest to:

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 net operating income in the flexible budget for January 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 equipment depreciation in the flexible budget performance report for the month should be: