Exam 9: Flexible Budgets and Performance Analysis

Eberley Corporation's cost formula for its manufacturing overhead is $25, 700 per month plus $10 per machine-hour.For the month of July, the company planned for activity of 5, 900 machine-hours, but the actual level of activity was 5, 920 machine-hours.The actual manufacturing overhead for the month was $86, 800. The manufacturing overhead in the planning budget for July would be closest to:

Toadvine Clinic uses patient-visits as its measure of activity.During April, the clinic budgeted for 3, 800 patient-visits, but its actual level of activity was 3, 400 patient-visits.The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $39.70q Personnel expenses: $38, 700 + $11.50q Medical supplies: $1, 000 + $7.30q Occupancy expenses: $11, 700 + $1.30q Administrative expenses: $6, 700 + $0.30q The clinic reported the following actual results for April: Required: Prepare a report showing the clinic's revenue and spending variances for April.Label each variance as favorable (F)or unfavorable (U).

Zelenka Clinic uses client-visits as its measure of activity.During June, the clinic budgeted for 2, 700 client-visits, but its actual level of activity was 2, 710 client-visits.The clinic has provided the following data concerning the formulas to be used in its budgeting for June: The administrative expenses in the planning budget for June would be closest to:

Grossenbacher Clinic bases its budgets on the activity measure patient-visits.During January, the clinic planned for 3, 800 patient-visits, but the actual level of activity was 3, 700 patient-visits.The clinic has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare a report showing the clinic's activity variances for January.Indicate in each case whether the variance is favorable (F)or unfavorable (U).

Controllability has little to do with whether a cost is fixed or variable.

Beecham Memorial Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for October was based on 3, 400 meals, but the diner actually served 3, 200 meals.The diner's director has provided the following cost formulas to use in budgets: The director has also provided the diner's statement of actual expenses for the month: Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for October.Label each variance as favorable (F)or unfavorable (U).

Juenemann 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, 800 tenant-days, but its actual level of activity was 3, 770 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 wages and salaries in the planning budget for December would be closest to:

Gilson Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During April, the company budgeted for 5, 100 units, but its actual level of activity was 5, 060 units.The company 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 direct materials in April would be closest to:

Thune Memorial Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for September was based on 3, 100 meals, but the diner actually served 3, 500 meals.The diner's director has provided the following cost formulas to use in budgets: Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for September.Label each variance as favorable (F)or unfavorable (U).

The activity variance for revenue is unfavorable if the actual level of activity for the period is less than the planned level of activity.

Leaphart 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 2, 800 tenant-days, but its actual level of activity was 2, 840 tenant-days.The kennel has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the planning budget for May would be closest to:

Wexell Framing's cost formula for its supplies cost is $1, 230 per month plus $10 per frame.For the month of October, the company planned for activity of 592 frames, but the actual level of activity was 597 frames.The actual supplies cost for the month was $7, 050.The activity variance for supplies cost in October would be closest to:

During July, Heron Corporation plans to serve 23, 000 customers.Revenue is $6.80 per customer served.Wages and salaries are $39, 900 per month plus $2.50 per customer served.Supplies are $1.40 per customer served.Insurance is $10, 300 per month.Miscellaneous expenses are $4, 800 per month plus $0.20 per customer served. Required: Prepare the company's planning budget for July.

Larance Detailing's cost formula for its materials and supplies is $2, 230 per month plus $1 per vehicle.For the month of November, the company planned for activity of 75 vehicles, but the actual level of activity was 25 vehicles.The actual materials and supplies for the month was $2, 160. The spending variance for materials and supplies in November would be closest to:

Glassing Clinic uses client-visits as its measure of activity.During September, the clinic budgeted for 3, 700 client-visits, but its actual level of activity was 3, 660 client-visits.The clinic has provided the following data concerning the formulas to be used in its budgeting: The activity variance for administrative expenses in September would be closest to:

Linscott Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During July, the company budgeted for 5, 400 units, but its actual level of activity was 5, 380 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The selling and administrative expenses in the planning budget for July would be closest to:

During May, Cockrel Corporation plans to serve 34, 000 customers.The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $2.90q Wages and salaries: $25, 400 + $0.90q Supplies: $0.40q Insurance: $7, 000 Miscellaneous expense: $4, 900 + $0.30q Required: Prepare the company's planning budget for May.

Towne Snow Removal's cost formula for its vehicle operating cost is $1, 470 per month plus $399 per snow-day.For the month of November, the company planned for activity of 13 snow-days, but the actual level of activity was 9 snow-days.The actual vehicle operating cost for the month was $5, 230.The vehicle operating cost in the flexible budget for November would be closest to:

A favorable spending variance occurs when the actual cost exceeds the amount of the cost in the static planning budget.

Hairston Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During November, the company budgeted for 7, 700 units, but its actual level of activity was 7, 720 units.The company 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 activity variance for direct labor in November would be closest to: