Exam 10: Flexible Budgets and Performance Analysis

Baugus 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 6,900 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: -The spending variance for direct materials in August would be closest to:

Faggs Corporation bases its budgets on the activity measure customers served. During December, the company planned to serve 33,000 customers, but actually served 36,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare a report showing the company's activity variances for December. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

If the actual level of activity is 4% less than planned, then the costs in the static budget should be reduced by 4% before comparing them to actual costs.

Poulsen 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 7,300 units, but its actual level of activity was 7,270 units. The company has provided the following data concerning the formulas to be used in its budgeting: -The manufacturing overhead in the flexible budget for July would be closest to:

Genito 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 8,800, the actual supplies cost was $69,450, the actual power cost was $34,190, the actual salaries cost was $86,490, and the actual equipment depreciation was $37,600. -The spending variance for power cost in the flexible budget performance report for the month should be:

Dantuono Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 7,700 units, but its actual level of activity was 7,720 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for November: -The direct labor in the planning budget for November would be closest to:

During August, Klinck Corporation plans to serve 33,000 customers. Revenue is $2.50 per customer served. Wages and salaries are $24,300 per month plus $0.90 per customer served. Supplies are $0.30 per customer served. Insurance is $7,100 per month. Miscellaneous expenses are $5,200 per month plus $0.10 per customer served. Required: Prepare the company's planning budget for August.

The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget.

Kalinowski 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 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: -The net operating income in the flexible budget for February would be closest to:

Genito 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 8,800, the actual supplies cost was $69,450, the actual power cost was $34,190, the actual salaries cost was $86,490, and the actual equipment depreciation was $37,600. -The spending variance for equipment depreciation in the flexible budget performance report for the month should be:

Aslanian Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for November was based on 2,200 meals, but the diner actually served 2,700 meals. The diner's director has provided the following cost formulas to use in budgets: Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for November. Label each variance as favorable (F) or unfavorable (U). Label each variance as favorable (F) or unfavorable (U).

Palamino 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 January, the company budgeted for 330 guests and 143 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 January. Label each variance as favorable (F) or unfavorable (U).

Kimbril 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 $530 per month plus $91 per job plus $12 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 January to be 27 jobs and 174 meals, but the actual activity was 31 jobs and 173 meals. The actual cost for catering supplies in January was $5,330. The activity variance for catering supplies in January would be closest to:

Whetstine 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 September, the kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,180 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 September would be closest to:

Grundhoefer 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 April, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 1,990 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: -The activity variance for administrative expenses in April would be closest to:

Kalinowski 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 2,300 tenant-days, but its actual level of activity was 2,320 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: -The wages and salaries in the planning budget for February would be closest to:

Laboe 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 2,900 tenant-days, but its actual level of activity was 2,940 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The administrative expenses in the planning budget for February would be closest to:

Buffaloe 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 5,200 units, but its actual level of activity was 5,250 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: -The direct labor in the planning budget for August would be closest to:

Enriques 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 5,000 units, but its actual level of activity was 4,990 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February: -The activity variance for direct labor in February would be closest to:

Squillace Corporation uses customers served as its measure of activity. During October, the company budgeted for 38,000 customers, but actually served 35,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October: Required: Prepare the company's flexible budget performance report for October. Label each variance as favorable (F) or unfavorable (U).