Exam 9: Flexible Budgets and Performance Analysis

Borunda Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $37, 020 per month plus $2, 731 per flight plus $6 per passenger.The company expected its activity in July to be 73 flights and 253 passengers, but the actual activity was 75 flights and 251 passengers.The actual cost for plane operating costs in July was $231, 770.The activity variance for plane operating costs in July would be closest to:

Hey Clinic bases its budgets on patient-visits.During September, the clinic plans for a level of activity of 2, 500 patient-visits.The clinic has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare the clinic's planning budget for September.

When a flexible budget is used in performance evaluation, actual costs are compared to the static planning budget rather than to what the costs should have been for the actual level of activity during the period.

Smithj 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 3, 500 tenant-days, but its actual level of activity was 3, 490 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 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 February would be closest to:

Chirico Clinic uses client-visits as its measure of activity.During February, the clinic budgeted for 2, 500 client-visits, but its actual level of activity was 2, 550 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 net operating income in the flexible budget for February would be closest to:

Hottle 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 February, the company budgeted for 342 guests and 146 jeeps.The company's income statement showing the actual results for the month appears below: Required: Prepare a flexible budget performance report showing both the company's activity variances and revenue and spending variances for February.Label each variance as favorable (F)or unfavorable (U).

Hagel Clinic uses client-visits as its measure of activity.During July, the clinic budgeted for 2, 300 client-visits, but its actual level of activity was 2, 320 client-visits.The clinic 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 spending variance for medical supplies in July would be closest to:

Sinopoli Corporation bases its budgets on machine-hours.The company's static planning budget for September appears below: Required: Prepare a flexible budget for 8, 600 machine-hours per month.

Zenon 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 July, the kennel budgeted for 3, 300 tenant-days, but its actual level of activity was 3, 260 tenant-days.The kennel 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 food and supplies in the flexible budget for July would be closest to:

Directly comparing static budget costs to actual costs only makes sense if the costs are variable.

Gandrud 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 June, the kennel budgeted for 2, 600 tenant-days, but its actual level of activity was 2, 580 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 June would be closest to:

Zike Corporation's static planning budget for October appears below.The company bases its budgets on machine-hours. In October, the actual number of machine-hours was 6, 000, the actual supplies cost was $14, 740, the actual power cost was $49, 170, the actual salaries cost was $15, 390, and the actual equipment depreciation was $63, 670. The spending variance for equipment depreciation in the flexible budget performance report for the month should be:

Bobe Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $44, 580 per month plus $2, 390 per flight plus $8 per passenger.The company expected its activity in May to be 68 flights and 211 passengers, but the actual activity was 71 flights and 210 passengers.The actual cost for plane operating costs in May was $215, 140. The activity variance for plane operating costs in May 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 manufacturing overhead in the flexible budget for July would be closest to:

Halbrooks Clinic bases its budgets on the activity measure patient-visits.During December, the clinic planned for 2, 600 patient-visits.The clinic has provided the following data concerning the formulas it uses in its budgeting: The clinic has also furnished its income statement for December: Required: Prepare a report showing the clinic's activity variances for December.

Privett Hospital bases its budgets on patient-visits.The hospital's static planning budget for November appears below: Actual results for the month were: The spending variance for laundry costs in the flexible budget performance report for the month is:

Lantagne Clinic uses client-visits as its measure of activity.During May, the clinic budgeted for 3, 800 client-visits, but its actual level of activity was 3, 820 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 net operating income in May would be closest to:

Kestner Clinic uses patient-visits as its measure of activity.During September, the clinic budgeted for 3, 000 patient-visits, but its actual level of activity was 2, 900 patient-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: Required: Prepare the clinic's flexible budget performance report for September.Label each variance as favorable (F)or unfavorable (U).

Gandrud 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 June, the kennel budgeted for 2, 600 tenant-days, but its actual level of activity was 2, 580 tenant-days.The kennel has provided the following data concerning the formulas to be used in its budgeting: The food and supplies in the flexible budget for June would be closest to:

Nicolaysen Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During February, the company budgeted for 5, 700 units, but its actual level of activity was 5, 690 units.The company 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 selling and administrative expenses in the planning budget for February would be closest to: