Exam 9: Flexible Budgets and Performance Analysis

Pargo Corporation bases its budgets on the activity measure customers served. During May, the company planned to serve 29,000 customers, but actually served 30,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare the company's flexible budget for May based on the actual level of activity for the month.

Malander 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 November, the kennel budgeted for 3,400 tenant-days, but its actual level of activity was 3,390 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Actual results for November: The activity variance for wages and salaries in November would be closest to:

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 activity variance for "Refurbishing materials" for March would have been closest to:

Varcoe Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 30,000 customers, but actually served 25,000 customers. Revenue is $3.80 per customer served. Wages and salaries are $34,100 per month plus $1.20 per customer served. Supplies are $0.50 per customer served. Insurance is $8,300 per month. Miscellaneous expenses are $6,400 per month plus $0.20 per customer served. Required: Prepare a report showing the company's activity variances for September. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Rients 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 October. When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October. The spending variance for total expenses for October would have been closest to:

Duprey Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,150 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 personnel expenses in the planning budget for January would be closest to:

Pattison 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. When the company prepared its planning budget at the beginning of May, it assumed that 20 customers would have been served. However, 17 customers were actually served during May. The activity variance for "Travel expenses" for May would have been closest to:

Hallet Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,800 units, but its actual level of activity was 5,830 units. The company 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 selling and administrative expenses in the planning budget for May would be closest to:

Differences between the static planning budget and the flexible budget show what should have happened because the actual level of activity differed from what had been planned.

Dilley Clinic uses patient-visits as its measure of activity. During November, the clinic budgeted for 3,100 patient-visits, but its actual level of activity was 3,500 patient-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: 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).

Ostler Hotel bases its budgets on guest-days. The hotel's static budget for April appears below: The total overhead cost at an activity level of 9,700 guest-days per month should be:

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 revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for June would have been closest to:

Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 5,900 units, but its actual level of activity was 5,940 units. The company 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 revenue variance for May 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 total expenses for May would have been closest to:

During October, Fryer Corporation budgeted for 30,000 customers, but actually served 33,000 customers. Revenue should be $2.90 per customer served. Wages and salaries should be $27,200 per month plus $0.80 per customer served. Supplies should be $0.60 per customer served. Insurance should be $6,700 per month. Miscellaneous expenses should be $3,100 per month plus $0.10 per customer served. Required: Prepare the company's flexible budget for October based on the actual level of activity for the month.

Keisker Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,190 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Actual results for November: The spending variance for occupancy expenses in November would be closest to:

Felicetti Corporation bases its budgets on the activity measure customers served. During November, the company planned to serve 21,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: The company has also furnished its income statement for November Required: Prepare a report showing the company's activity variances for November. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Chimilio Clinic uses client-visits as its measure of activity. During June, the clinic budgeted for 3,400 client-visits, but its actual level of activity was 3,360 client-visits. The clinic 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 January: The occupancy expenses in the flexible budget for June would be closest to:

Higgs Enterprise's flexible budget cost formula for indirect materials, a variable cost, is $0.75 per unit of output. If the company's performance report for last month shows a $600 favorable spending variance for indirect materials and if 8,000 units of output were produced last month, then the actual costs incurred for indirect materials for the month must have been:

Bernes 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 October, the kennel budgeted for 2,700 tenant-days, but its actual level of activity was 2,720 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The activity variance for wages and salaries in October would be closest to: