Exam 9: Master Budgeting

Paye Clinic uses patient-visits as its measure of activity.The following report compares the planning budget to the actual operating results for the month of January: Required: Prepare a report showing the clinic's revenue and spending variances for January.Label each variance as favorable (F)or unfavorable (U).

Oddo Corporation makes a product with the following standard costs: The company reported the following results concerning this product in December. 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 December is:

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.

The variance that is usually most useful in assessing the performance of the purchasing department manager is:

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 wages and salaries in the planning budget for March 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:

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 spending variance for manufacturing overhead in July would be closest to:

Beakins Corporation produces a single product.The standard cost card for the product follows: During a recent period the company produced 1,200 units of product.Various costs associated with the production of these units are given below: The company records all variances at the earliest possible point in time.Variable manufacturing overhead costs are applied to products on the basis of standard direct labor-hours. The variable overhead rate variance for the period is:

Dreary Credit Agency uses a standard cost system for the processing of its credit applications.The labor standard at Dreary is 10 applications per 8 hour day at a standard cost of $15 per hour. During the last pay period,Dreary's credit agents worked 1,920 hours and processed 2,500 applications.The total labor cost for the agents during this period was $29,184.What was Dreary's labor efficiency variance for this last pay period?

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.

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

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 performance report for the month should be:

Diemert Corporation bases its budgets on machine-hours.The company's static planning budget for June appears below: Actual results for the month were: The spending variance for power costs in the performance report for the month should be:

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.

Wall Corporation,which produces commercial safes,has provided the following data: Supplies cost is an element of variable manufacturing overhead. The variable overhead rate variance for supplies is closest to:

Bard Hotel bases its budgets on guest-days.The hotel's static budget for January appears below: The total fixed cost at the activity level of 10,600 guest-days per month should be:

Paradiso Medical Clinic measures its activity in terms of patient-visits.Last month,the budgeted level of activity was 1,060 patient-visits and the actual level of activity was 1,050 patient-visits.The cost formula for administrative expenses is $3.00 per patient-visit plus $17,000 per month.The actual administrative expense was $19,300.In the clinic's performance report for last month,the spending variance for administrative expenses was:

A major weakness of flexible budgets is that:

During April,Cheatam Corporation budgeted for 27,000 customers,but actually served 23,000 customers.The company uses the following revenue and cost formulas in its budgeting,where q is the number of customers served: Revenue: $4.10q Wages and salaries: $33,300 + $1.10q Supplies: $0.70q Insurance: $8,600 Miscellaneous expense: $3,700 + $0.40q Required: Prepare the company's flexible budget for April 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 medical supplies in the flexible budget for June would be closest to: