Exam 9: Flexible Budgets and Performance Analysis

Jiminian Clinic uses client-visits as its measure of activity.During March, 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 used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: The occupancy expenses in the flexible budget for March would be closest to:

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 occupancy costs in the flexible budget performance report for the month is:

Pearse 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, 000 tenant-days, but its actual level of activity was 2, 980 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 activity variance for net operating income in December would be closest to:

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 medical supplies in the flexible budget for June would be closest to:

An unfavorable activity variance for a variable cost occurs because the actual level of activity is higher than expected when the static planning budget was prepared.

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 personnel expenses in September would be closest to:

Perla 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, 200 tenant-days, but its actual level of activity was 2, 160 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:

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 plane operating costs in the flexible budget for May would be closest to:

During February, Oshell Clinic budgeted for 3, 600 patient-visits, but its actual level of activity was 3, 200 patient-visits.The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $28.80q Personnel expenses: $22, 500 + $9.90q Medical supplies: $1, 200 + $4.70q Occupancy expenses: $6, 700 + $1.30q Administrative expenses: $4, 800 + $0.20q Required: Prepare the clinic's flexible budget for February based on the actual level of activity for the month.

Hammes 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, 500 units, but its actual level of activity was 5, 510 units.The company has provided the following data concerning the formulas to be used in its budgeting: The activity variance for direct labor in February would be closest to:

A flexible budget cannot be used to estimate what costs should have been at a given level of activity.

Pearse 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, 000 tenant-days, but its actual level of activity was 2, 980 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 net operating income in the planning budget for December would be closest to:

Kudej 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, 360 per month plus $570 per press run plus $910 per book set-up.The company expected its activity in May to be 194 press runs and 74 book set-ups, but the actual activity was 195 press runs and 72 book set-ups.The actual cost for wages and salaries in May was $188, 370. The wages and salaries in the flexible budget for May would be closest to:

Hartz Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for July was based on 3, 100 meals.The diner's director has provided the following cost data to use in the budget: groceries, $2.50 per meal;kitchen operations, $4, 700 per month plus $1.75 per meal;administrative expenses, $2, 200 per month plus $0.85 per meal;and fundraising expenses, $1, 700 per month.The director has also provided the diner's statement of actual expenses for the month: Required: Prepare a report showing the diner's spending variances for each of the expenses and for total expenses for July.Label each variance as favorable (F)or unfavorable (U).

Dus 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 $89 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 March to be 11 jobs and 81 meals, but the actual activity was 7 jobs and 76 meals.The actual cost for catering supplies in March was $1, 810.The activity variance for catering supplies in March would be closest to:

Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month.When the actual level of activity is less than budgeted, which of the following would be true?

Illescas Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During December, the company budgeted for 6, 400 units, but its actual level of activity was 6, 440 units.The company has provided the following data concerning the formulas to be used in its budgeting: The selling and administrative expenses in the planning budget for December would be closest to:

Capilla Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for October is to be based on 3, 300 meals.The diner's director has provided the following cost data to use in the budget: groceries, $2.85 per meal;kitchen operations, $4, 100 per month plus $1.25 per meal;administrative expenses, $3, 400 per month plus $0.40 per meal;and fundraising expenses, $1, 800 per month. Required: Prepare the diner's budget for the month of October.The budget will only contain the costs listed above;no revenues will be on the budget.

Lartey Corporation's cost formula for its selling and administrative expense is $22, 200 per month plus $27 per unit.For the month of December, the company planned for activity of 5, 300 units, but the actual level of activity was 5, 270 units.The actual selling and administrative expense for the month was $168, 150. The spending variance for selling and administrative expense in December would be closest to:

Ochwat Clinic bases its budgets on the activity measure patient-visits.During July, the clinic planned for 3, 600 patient-visits, but its actual level of activity was 4, 100 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 July.Indicate in each case whether the variance is favorable (F)or unfavorable (U).