Exam 9: Flexible Budgets and Performance Analysis

Arrison Corporation uses customers served as its measure of activity. During July, the company budgeted for 34,000 customers, but actually served 33,000 customers. 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: Required: Prepare the company's flexible budget performance report for July. Label each variance as favorable (F) or unfavorable (U).

Leist Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,170 client-visits. The clinic 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:

Lawes 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 5,000 units, but its actual level of activity was 5,050 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 July would be closest to:

Spohn Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 3,400 client-visits, but its actual level of activity was 3,370 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for February: The medical supplies in the flexible budget for February would be closest to:

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: The total fixed cost at the activity level of 9,600 patient-visits per month should be:

Hamiter Framing's cost formula for its supplies cost is $1,640 per month plus $9 per frame. For the month of August, the company planned for activity of 572 frames, but the actual level of activity was 573 frames. The actual supplies cost for the month was $7,080. The supplies cost in the planning budget for August would be closest to:

Flexible budgets can be used when there is more than one cost driver (i.e., measure of activity).

Bruer 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 November, the company budgeted for 348 guests and 143 jeeps. The actual activity for the month was 373 guests and 139 jeeps. Required: Prepare a report showing the company's activity variances for November. Label each variance as favorable (F) or unfavorable (U).

Teel Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $8,850 per month plus $400 per press run plus $950 per book set-up. The company expected its activity in July to be 204 press runs and 111 book set-ups, but the actual activity was 201 press runs and 110 book set-ups. The actual cost for wages and salaries in July was $193,780. The wages and salaries in the planning budget for July would be closest to:

Harold 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 7,900 units, but its actual level of activity was 7,860 units. The company 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 activity variance for selling and administrative expenses in March would be closest to:

Courington Detailing's cost formula for its materials and supplies is $2,420 per month plus $9 per vehicle. For the month of August, the company planned for activity of 63 vehicles, but the actual level of activity was 33 vehicles. The actual materials and supplies for the month was $2,840. The materials and supplies in the planning budget for August would be closest to:

Laizure Clinic uses patient-visits as its measure of activity. The clinic bases its budgets on the following information: Revenue should be $55.90 per patient-visit. Personnel expenses should be $35,700 per month plus $15.80 per patient-visit. Medical supplies should be $2,000 per month plus $11.20 per patient-visit. Occupancy expenses should be $8,400 per month plus $2.00 per patient-visit. Administrative expenses should be $3,900 per month plus $0.10 per patient-visit. The clinic reported the following actual results for November: Required: Prepare a report showing the clinic's revenue and spending variances for November. Label each variance as favorable (F) or unfavorable (U).

Barrom Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for July is to be based on 2,000 meals. The diner's director has provided the following cost formulas to use in the budget: Required: Prepare the diner's budget for the month of July. The budget will only contain the costs listed above; no revenues will be on the budget.

Prestridge 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 August. When the company prepared its planning budget at the beginning of August, it assumed that 31 customers would have been served. However, 29 customers were actually served during August. The spending variance for total expenses for August would have been closest to:

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 revenue in the company's flexible budget for May would have been closest to:

During February, Barreca Clinic plans for an activity level of 2,700 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $49.10q Personnel expenses: $34,100 + $13.20q Medical supplies: $1,300 + $9.40q Occupancy expenses: $8,300 + $1.40q Administrative expenses: $6,100 + $0.30q Required: Prepare the clinic's planning budget for February.

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 total expenses for March would have been closest to:

Billafuerte 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 July, the company budgeted for 496 guests and 233 jeeps. The actual activity for the month was 481 guests and 238 jeeps. Required: Prepare the company's planning budget for July.

Fager Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,250 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Actual results for February: The revenue variance for February would be closest to:

Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company 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 manufacturing overhead in the flexible budget for December would be closest to: