Exam 9: Flexible Budgets and Performance Analysis

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

Prowse 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. A total of 42 wells were actually serviced during October. The total expenses in the flexible budget for October would have been closest to:

Paulis 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 2,500 tenant-days, but its actual level of activity was 2,480 tenant-days. The kennel 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 net operating income in the flexible budget for February would be closest to:

A flexible budget performance report contains activity variances but not revenue or spending variances.

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 "Servicing materials" in the planning budget for November would have been closest to:

Lightsey Natural Dying Corporation measures its activity in terms of skeins of yarn dyed. Last month, the budgeted level of activity was 14,800 skeins and the actual level of activity was 15,100 skeins. The company's owner budgets for dye costs, a variable cost, at $0.51 per skein. The actual dye cost last month was $8,660. In the company's flexible budget performance report for last month, what would have been the spending variance for dye costs?

Paulis 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 2,500 tenant-days, but its actual level of activity was 2,480 tenant-days. The kennel 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 net operating income in the planning budget for February would be closest to:

Prowse 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. A total of 42 wells were actually serviced during October. The "Servicing materials" in the flexible budget for October would have been closest to:

At Jacobson Company, indirect labor is a variable cost that varies with direct labor-hours. Last month's performance report showed that actual indirect labor cost totaled $5,780 for the month and that the associated spending variance was $245 F. If 24,100 direct labor-hours were actually worked last month, then the flexible budget cost formula for indirect labor must be (per direct labor-hour):

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below: The total variable cost at the activity level of 5,000 guest-days per month should be:

Cryan 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 May, the company budgeted for 447 guests and 152 jeeps. The company's income statement showing the actual results for the month appears below: Required: Prepare a report showing the company's revenue and spending variances for May. Label each variance as favorable (F) or unfavorable (U).

Rhed 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 3,700 tenant-days, but its actual level of activity was 3,650 tenant-days. The kennel 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 facility expenses in the flexible budget for December would be closest to:

During April, Shvey Clinic plans for an activity level of 2,100 patient-visits. Revenue is $48.10 per patient-visit. Personnel expenses are $28,800 per month plus $12.30 per patient-visit. Medical supplies are $1,300 per month plus $8.10 per patient-visit. Occupancy expenses are $8,100 per month plus $2.00 per patient-visit. Administrative expenses are $2,900 per month plus $0.20 per patient-visit. Required: Prepare the clinic's planning budget for April.

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 medical supplies in the flexible budget for September would be closest to:

Muehlberger 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. A total of 28 customers were actually served during April. Required: Prepare a flexible budget for the actual level of activity for April.

Isadore Hospital bases its budgets on patient-visits. The hospital's static planning budget for July appears below: Actual results for the month were: The spending variance for supplies costs in the flexible budget performance report for the month is:

Lochner 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 and the actual results of operations for June. When the company prepared its planning budget at the beginning of June, it assumed that 24 wells would have been serviced. However, 26 wells were actually serviced during June. The activity variance for revenue for June would have been closest to:

Isadore Hospital bases its budgets on patient-visits. The hospital's static planning budget for July appears below: Actual results for the month were: The spending variance for occupancy costs in the flexible budget performance report for the month is:

Dreckman 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 36 customers would have been served. However, 31 customers were actually served during August. The "Other expenses" in the flexible budget for August would have been closest to:

If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected.