Exam 10: Flexible Budgets and Performance Analysis

A favorable spending variance occurs when the actual cost is less than the amount of that cost in the flexible budget.

Moorhouse Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: -The medical supplies in the flexible budget for December would be closest to:

Stent 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 3,000 tenant-days, but its actual level of activity was 2,950 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:

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

When the activity measure is the number of units sold, the revenue variance is unfavorable if the average actual selling price is less than expected.

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 net operating income in February 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 facility expenses in the flexible budget for February would be closest to:

Lampert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 6,100 units, but its actual level of activity was 6,060 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March: -The manufacturing overhead in the flexible budget for March would be closest to:

During May, Phong Clinic budgeted for 2,900 patient-visits, but its actual level of activity was 3,100 patient-visits. Revenue should be $31.30 per patient-visit. Personnel expenses should be $23,700 per month plus $8.10 per patient-visit. Medical supplies should be $700 per month plus $6.20 per patient-visit. Occupancy expenses should be $7,000 per month plus $1.50 per patient-visit. Administrative expenses should be $3,400 per month plus $0.40 per patient-visit. Required: Prepare the clinic's flexible budget for May based on the actual level of activity for the month.

Lauser Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: -The occupancy expenses in the flexible budget for July would be closest to:

Clune Clinic bases its budgets on the activity measure patient-visits. During October, the clinic planned for an activity level of 2,100 patient-visits, but the activity level was actually 2,600 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare the clinic's flexible budget for October based on the actual level of activity for the month.

Delamarter Clinic bases its budgets on the activity measure patient-visits. During June, the clinic planned for 2,600 patient-visits, but its actual level of activity was 3,100 patient-visits. Revenue should be $53.40 per patient-visit. Personnel expenses should be $39,700 per month plus $12.60 per patient-visit. Medical supplies should be $1,800 per month plus $10.40 per patient-visit. Occupancy expenses should be $8,200 per month plus $2.30 per patient-visit. Administrative expenses should be $6,100 per month plus $0.20 per patient-visit. Required: Prepare a report showing the clinic's activity variances for June. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Worden Hospital bases its budgets on patient-visits. The hospital's static budget for February appears below: -The total cost at the activity level of 4,600 patient-visits per month should be:

Moorhouse Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: -The spending variance for medical supplies in December 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 selling and administrative expenses in February 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 wages and salaries in April would be closest to:

Spraque 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 $40,520 per month plus $2,733 per flight plus $11 per passenger. The company expected its activity in June to be 71 flights and 207 passengers, but the actual activity was 70 flights and 205 passengers. The actual cost for plane operating costs in June was $239,580. -The plane operating costs in the flexible budget for June would be closest to:

Bures 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 April, the company budgeted for 360 guests and 134 jeeps. The actual activity for the month was 335 guests and 136 jeeps. Required: Prepare a report showing the company's activity variances for April. Label each variance as favorable (F) or unfavorable (U).

Rippelmeyer 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 June, the kennel budgeted for 3,600 tenant-days, but its actual level of activity was 3,550 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for June: -The spending variance for expendables in June would be closest to:

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 direct labor in the planning budget for August would be closest to: