Exam 9: Flexible Budgets and Performance Analysis

Virgen 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 3,700 tenant-days, but its actual level of activity was 3,690 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 administrative expenses in the planning budget for May would be closest to:

Ginnings Corporation bases its budgets on the activity measure customers served. During May, the company planned to serve 38,000 customers, but actually served 37,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $2.90q Wages and salaries: $37,200 + $0.80q Supplies: $0.40q Insurance: $8,900 Miscellaneous expense: $6,400 + $0.10q Required: Prepare a report showing the company's activity variances for May. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Tos Corporation's flexible budget cost formula for indirect materials, a variable cost, is $0.60 per unit of output. If the company's performance report for last month shows a $800 unfavorable spending variance for indirect materials and if 9,000 units of output were produced last month, then the actual costs incurred for indirect materials for the month must have been:

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 net operating income in the flexible budget for December would be closest to:

Wytch Corporation bases its budgets on machine-hours. The company's static planning budget for February appears below: Required: Prepare a flexible budget for 6,400 machine-hours per month.

The activity variance for revenue is favorable if the revenue in the flexible budget exceeds the revenue in the static planning budget.

Gordin 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 3,000 tenant-days, but its actual level of activity was 3,020 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 facility expenses in the flexible budget for May would be closest to:

Neighbors 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 3,000 tenant-days, but its actual level of activity was 2,960 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting: Actual results for April: The activity variance for net operating income in April would be closest to:

Brong 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 March. When the company prepared its planning budget at the beginning of March, it assumed that 22 containers would have been refurbished. However, 18 containers were actually refurbished during March. The spending variance for "Employee salaries and wages" for March would have been closest to:

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 direct materials in the flexible budget for January would be closest to:

Thilking Midwifery's cost formula for its wages and salaries is $2,140 per month plus $454 per birth. For the month of August, the company planned for activity of 102 births, but the actual level of activity was 100 births. The actual wages and salaries for the month was $47,660. The wages and salaries in the flexible budget for August would be closest to:

Tomlison 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 5,150 units. The company has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the planning budget for October would be closest to:

Shiigi Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for May is to be based on 3,300 meals. The diner's director has provided the following cost data to use in the budget: groceries, $3.80 per meal; kitchen operations, $4,600 per month plus $1.25 per meal; administrative expenses, $3,800 per month plus $0.40 per meal; and fundraising expenses, $1,700 per month. Required: Prepare the diner's budget for the month of May. The budget will only contain the costs listed above; no revenues will be on the budget.

Meinke 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 3,700 tenant-days, but its actual level of activity was 3,680 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting: Actual results for April: The spending variance for food and supplies in April would be closest to:

Smith 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 February. When the company prepared its planning budget at the beginning of February, it assumed that 31 containers would have been refurbished. However, 26 containers were actually refurbished during February. Required: Prepare a report showing the company's revenue and spending variances for February. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Skoff 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 March. When the company prepared its planning budget at the beginning of March, it assumed that 35 containers would have been refurbished. However, 32 containers were actually refurbished during March. The spending variance for "Refurbishing materials" for March would have been closest to:

Kawamura 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 December, 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 to be used in its budgeting: The net operating income in the planning budget for December would be closest to:

Schriever 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. The planning budget for May was based on 36 wells serviced, but a total of 31 wells were actually serviced in May. The activity variance for "Other expenses" for May would have been closest to:

Wellmann 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 February. When the company prepared its planning budget at the beginning of February, it assumed that 35 customers would have been served. However, 31 customers were actually served during February. The spending variance for total expenses for February would have been closest to:

Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,500 client-visits, but its actual level of activity was 3,490 client-visits. The clinic 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 overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for January would be closest to: