Exam 9: Master Budgeting

A revenue variance is favorable if the actual revenue exceeds what the revenue should have been for the actual level of activity of the period.

Canevari Corporation makes a product that uses a material with the following standards: The company budgeted for production of 1,300 units in April,but actual production was 1,200 units.The company used 3,750 kilos of direct material to produce this output.The company purchased 4,100 kilos of the direct material at a total cost of $8,610.The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is:

Bruess Clinic uses patient-visits as its measure of activity.During July,the clinic budgeted for 2,700 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: The clinic reported the following actual results for July: Required: Prepare a report showing the clinic's revenue and spending variances for July.Label each variance as favorable (F)or unfavorable (U).

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:

Miao Clinic uses client-visits as its measure of activity.During July,the clinic budgeted for 3,000 client-visits,but its actual level of activity was 2,980 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 administrative expenses in the planning budget for July would be closest to:

Holiday Chemical Corporation uses a standard cost system to collect costs related to the production of its "bowling ball" fruitcakes.The direct labor standard for each fruitcake is 1.25 hours at a standard cost of $11.00 per hour.During the month of November,Holiday's fruitcake production used 9,820 direct labor-hours at a total direct labor cost of $106,547.This resulted in production of 8,500 fruitcakes for November. What is Holiday's labor efficiency variance for November?

Bracamonte Hospital bases its budgets on patient-visits.The hospital's static planning budget for November appears below: Required: Prepare a flexible budget for 8,900 patient-visits per month.

Longview Hospital performs blood tests in its laboratory.The following standards have been set for each blood test performed: During May,the laboratory performed 1,500 blood tests.On May 1 there were no direct materials (plates)on hand;after a plate is used for a blood test it is discarded.Variable overhead is assigned to blood tests on the basis of standard direct labor-hours.The following events occurred during May: • 3,600 plates were purchased for $9,540 • 3,200 plates were used for blood tests • 340 actual direct labor-hours were worked at a cost of $5,550 The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for May is:

Tabeling Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During August,the company budgeted for 6,500 units,but its actual level of activity was 6,540 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: Data used in budgeting: Actual results for August: 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 August would be closest to:

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 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 July would be closest to:

Blue Corporation's standards call for 2,500 direct labor-hours to produce 1,000 units of product.During May 900 units were produced and the company worked 2,400 direct labor-hours.The standard hours allowed for May production would be:

Smyer Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July. The materials price variance is recognized when materials are purchased.Variable overhead is applied on the basis of direct labor-hours. Required: a.Compute the materials quantity variance. b.Compute the materials price variance. c.Compute the labor efficiency variance. d.Compute the labor rate variance. e.Compute the variable overhead efficiency variance. f.Compute the variable overhead rate variance.

Midgley Corporation makes a product whose direct labor standards are 0.8 hours per unit and $22.00 per hour.In April the company produced 6,900 units using 5,250 direct labor-hours.The actual direct labor cost was $113,925. The labor efficiency variance for April is:

Cosme 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 April,the school budgeted for 1,870 students and 174 courses.The school's income statement showing the actual results for the month appears below: Required: Prepare a showing the school's revenue and spending variances for April.Label each variance as favorable (F)or unfavorable (U).

Dancause Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During October,the company budgeted for 5,100 units,but its actual level of activity was 5,090 units.The company has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the flexible budget for October would be closest to:

Prater 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 5,400 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 February: Data used in budgeting: Actual results for February: The manufacturing overhead in the flexible budget for February would be closest to:

Vanderhyde 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 3,300 tenant-days,but its actual level of activity was 3,340 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:

Epley Corporation makes a product with the following standard costs: In July the company produced 3,300 units using 12,240 pounds of the direct material and 2,760 direct labor-hours.During the month,the company purchased 13,000 pounds of the direct material at a cost of $35,100.The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148. 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 materials price variance for July is:

Tout Corporation makes a product that has the following direct labor standards: The company budgeted for production of 6,400 units in October,but actual production was 6,500 units.The company used 610 direct labor-hours to produce this output.The actual direct labor rate was $21.80 per hour. The labor efficiency variance for October is:

Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.