Exam 9: Master Budgeting

Viel Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for April was based on 3,100 meals,but the diner actually served 3,300 meals.The diner's director has provided the following cost data to use in the budget: groceries,$3.95 per meal;kitchen operations,$5,200 per month plus $1.40 per meal;administrative expenses,$3,300 per month plus $0.80 per meal;and fundraising expenses,$1,800 per month. Required: Prepare the diner's flexible budget for the actual number of meals served in April.The budget will only contain the costs listed above;no revenues will be on the budget.

Stench Foods Corporation uses a standard cost system to collect costs related to the production of its garlic flavored yogurt.The garlic (materials)standards for each container of yogurt produced are 0.8 ounces of crushed garlic at a standard cost of $2.30 per ounce. During the month of June,Stench purchased 75,000 ounces of crushed garlic at a total cost of $171,000.Stench used 64,000 of these ounces to produce 71,500 containers of yogurt. The direct materials purchases variance is computed when the materials are purchased. What is Stench's materials quantity variance for June?

The following direct labor standards have been established for product S57S: The following data pertain to last month's operations: Required: a.What was the labor rate variance for the month? b.What was the labor efficiency variance for the month?

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:

Waste on the production line will result in an unfavorable materials quantity variance.

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 a report showing the clinic's revenue and spending variances for September.Label each variance as favorable (F)or unfavorable (U).

Eliezrie Corporation makes a product with the following standard costs: In January the company's budgeted production was 7,400 units but the actual production was 7,500 units.The company used 45,580 kilos of the direct material and 2,030 direct labor-hours to produce this output.During the month,the company purchased 48,500 kilos of the direct material at a cost of $53,350.The actual direct labor cost was $18,473 and the actual variable overhead cost was $7,714. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for January is:

In a company's standard costing system direct labor-hours are used as the base for applying variable manufacturing overhead costs.The standard direct labor rate is twice the variable overhead rate.Last period the labor efficiency variance was unfavorable.From this information one can conclude that last period the variable overhead efficiency variance was:

A direct materials quantity standard generally includes an allowance for waste.

The standard cost card for one unit of a certain finished product shows the following: If the total standard variable cost for one unit of finished product is $85,then the standard price per pound for direct materials is:

Coderre 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 7,800 units,but its actual level of activity was 7,780 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 spending variance for direct materials in July would be closest to:

Poljak 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 February,the school budgeted for 1,970 students and 137 courses.The school's income statement showing the actual results for the month appears below: Required: Prepare a report showing the school's revenue and spending variances for February.Label each variance as favorable (F)or unfavorable (U).

Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours.The quantity standard is 0.6 hours per unit.The variable overhead rate standard is $5.00 per hour.In September the company produced 1,600 units using 950 direct labor-hours.The actual variable overhead rate was $5.10 per hour. The variable overhead rate variance for September is:

Biery Corporation makes a product with the following standard costs: The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours.During the month,the company purchased 6,000 liters of the direct material at $5.80 per liter.The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for April 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 overall revenue and spending variance (i.e. ,the variance for net operating income in the revenue and spending variance column on the revenue and spending variances report)for May would be closest to:

Fixed costs should be included in a flexible budget even though they do not change when the level of activity changes.

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost.Jackson has established the following standards for one unit of product. During May,Jackson purchased 125,000 pounds of direct material at a total cost of $475,000.The total factory wages for May were $364,000,90 percent of which were for direct labor.Jackson manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor-hours. The labor rate variance for May is:

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.

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 net operating income in the planning budget for June would be closest to:

Wales 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 2,700 tenant-days,but its actual level of activity was 2,730 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 February would be closest to: