Exam 9: Flexible Budgets and Performance Analysis

Korsak 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. The planning budget for October was based on serving 23 customers, but a total of 19 customers were actually served during October.The activity variance for net operating income for October would have been closest to:

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:

Bade Midwifery's cost formula for its wages and salaries is $1,220 per month plus $246 per birth. For the month of October, the company planned for activity of 106 births, but the actual level of activity was 102 births. The actual wages and salaries for the month was $27,250. The activity variance for wages and salaries in October would be closest to:

Sunn Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 6,100 units, but its actual level of activity was 6,050 units. The company has provided the following data concerning the formulas to be used in its budgeting: The direct materials in the flexible budget for November would be closest to:

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 wages and salaries in the planning budget for May would be closest to:

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 net operating income in October would be closest to:

Roberds 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 March, the school budgeted for 1,760 students and 73 courses. The school's income statement showing the actual results for the month appears below: Required:Prepare a flexible budget performance report showing both the school's activity variances and revenue and spending variances for March. Label each variance as favorable (F) or unfavorable (U).

Trevorrow 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 6,000 units, but its actual level of activity was 5,960 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 net operating income in June would be closest to:

Leven Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 3,050 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for September: The net operating income in the planning budget for September would be closest to:

During December, Hynes Corporation plans to serve 35,000 customers. Revenue is $2.00 per customer served. Wages and salaries are $24,600 per month plus $0.50 per customer served. Supplies are $0.30 per customer served. Insurance is $5,400 per month. Miscellaneous expenses are $4,100 per month plus $0.10 per customer served.Required:Prepare the company's planning budget for December.

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).

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:

Shaak Corporation uses customers served as its measure of activity. The company bases its budgets on the following information: Revenue should be $3.20 per customer served. Wages and salaries should be $21,000 per month plus $0.80 per customer served. Supplies should be $0.70 per customer served. Insurance should be $5,300 per month. Miscellaneous expenses should be $3,100 per month plus $0.10 per customer served.The company reported the following actual results for October: Required:Prepare a report showing the company's revenue and spending variances for October. Label each variance as favorable (F) or unfavorable (U).

Solimini Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for January was based on 3,900 meals, but the diner actually served 3,400 meals. The diner's director has provided the following cost formulas to use in budgets: Required:Prepare a report showing the activity variances for each of the expenses and for total expenses for January. Label each variance as favorable (F) or unfavorable (U).

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).

Dure Corporation's cost formula for its selling and administrative expense is $24,500 per month plus $1 per unit. For the month of July, the company planned for activity of 7,200 units, but the actual level of activity was 7,160 units. The actual selling and administrative expense for the month was $31,460.The spending variance for selling and administrative expense in July 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: $3.50qWages and salaries: $33,200 + $1.10qSupplies: $0.50qInsurance: $10,400Miscellaneous expense: $6,400 + $0.30qThe 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).

During September, Clendennen Corporation budgeted for 24,000 customers, but actually served 27,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $6.00qWages and salaries: $36,700 + $2.10qSupplies: $1.10qInsurance: $12,600Miscellaneous expense: $4,600 + $0.30qRequired: Prepare the company's flexible budget for September based on the actual level of activity for the month.

Dubberly Corporation's cost formula for its manufacturing overhead is $31,200 per month plus $51 per machine-hour. For the month of March, the company planned for activity of 8,020 machine-hours, but the actual level of activity was 7,940 machine-hours. The actual manufacturing overhead for the month was $463,350.The activity variance for manufacturing overhead in March would be closest to:

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 4,050 tenant-days, but its actual level of activity was 4,000 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 activity variance for administrative expenses in December would be closest to: