Exam 9: Flexible Budgets and Performance Analysis

Neeb Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 7,040 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: The activity variance for selling and administrative expenses in January would be closest to:

Kirkeby Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of May, it assumed that 32 containers would have been refurbished. However, 34 containers were actually refurbished during May. The "Refurbishing materials" in the flexible budget for May would have been closest to:

Cosden Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 31 wells were actually serviced during May. The total expenses in the flexible budget for May would have been closest to:

Elvin Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below: Required: Prepare a flexible budget for 5,300 patient-visits per month.

Klingshirn Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for December. When the company prepared its planning budget at the beginning of December, it assumed that 25 customers would have been served. However, 23 customers were actually served during December. Required: Prepare a performance report showing the company's activity and revenue and spending variances for December. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Faulks Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of August, it assumed that 23 containers would have been refurbished. However, 26 containers were actually refurbished during August. The amount shown for total expenses in the planning budget for August would have been closest to:

A spending variance is the difference between the amount of the cost in the static planning budget and the amount of the cost in the flexible budget.

Stegemann Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for May. When the company prepared its planning budget at the beginning of May, it assumed that 27 containers would have been refurbished. However, 29 containers were actually refurbished during May. The amount shown for "Other expenses" in the planning budget for May would have been closest to:

Shevlin Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for July was based on 3,200 meals, but the diner actually served 3,600 meals. The diner's director has provided the following cost data to use in the budget: groceries, $3.35 per meal; kitchen operations, $5,800 per month plus $1.25 per meal; administrative expenses, $3,400 per month plus $0.40 per meal; and fundraising expenses, $1,400 per month. Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for July. Label each variance as favorable (F) or unfavorable (U).

In a flexible budget, what will happen to fixed costs as the activity level increases?

During June, Tarras Corporation plans to serve 36,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.50q Wages and salaries: $35,100 + $0.90q Supplies: $0.70q Insurance: $8,500 Miscellaneous expense: $4,100 + $0.30q Required: Prepare the company's planning budget for June.

Sincell Corporation uses customers served as its measure of activity. During April, the company budgeted for 22,000 customers, but actually served 24,000 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: $26,000 + $1.10q Supplies: $0.70q Insurance: $7,100 Miscellaneous expense: $3,400 + $0.30q The company reported the following actual results for April: Required: Prepare a report showing the company's revenue and spending variances for April. Label each variance as favorable (F) or unfavorable (U).

Kekiwi Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 6,900 units, but its actual level of activity was 6,910 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: The manufacturing overhead in the flexible budget for January would be closest to:

Manter Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,900 units, but its actual level of activity was 6,940 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June: Data used in budgeting: Actual results for June: The activity variance for direct labor in June would be closest to:

Neeb Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 7,040 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: The direct labor in the planning budget for January would be closest to:

Arrasmith Corporation uses customers served as its measure of activity. During February, the company budgeted for 35,000 customers, but actually served 34,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.50q Wages and salaries: $33,200 + $1.10q Supplies: $0.50q Insurance: $10,400 Miscellaneous expense: $6,400 + $0.30q The company reported the following actual results for February: Required: Prepare the company's flexible budget performance report for February. Label each variance as favorable (F) or unfavorable (U).

Rossean 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 October, the school budgeted for 1,400 students and 127 courses. The actual activity for the month was 1,500 students and 129 courses. Required: Prepare a report showing the school's activity variances for October. Label each variance as favorable (F) or unfavorable (U).

Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Actual results for December: The occupancy expenses in the flexible budget for December would be closest to:

Pickrel Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of November, it assumed that 27 wells would have been serviced. However, 31 wells were actually serviced during November. The amount shown for "Employee salaries and wages" in the planning budget for November would have been closest to:

Chaudhuri Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for April was based on 2,700 meals. The diner's director has provided the following cost formulas to use in budgets: The director has also provided the diner's statement of actual expenses for the month: Required: Prepare a flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for April. Label each variance as favorable (F) or unfavorable (U).