Exam 9: Flexible Budgets and Performance Analysis

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 administrative expenses in the planning budget for May would be closest to:

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).

During September, Clendennen Corporation budgeted for 43,000 customers, but actually served 41,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $4.56qWages and salaries: $36,800 + $1.89qSupplies: $0.79qInsurance: $13,800Miscellaneous expense: $6,800 + $0.29qRequired:Prepare the company's flexible budget for September based on the actual level of activity for the month.

Dinham 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 March, the kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,830 tenant-days. The kennel 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 spending variance for food and supplies in March would be 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 net operating income in the planning budget for May would be closest to:

Moncrief Corporation bases its budgets on machine-hours. The company's static planning budget for July appears below: Actual results for the month were: The spending variance for equipment depreciation in the flexible budget performance report for the month should be:

Hirons Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $56,840 per month plus $2,874 per flight plus $13 per passenger. The company expected its activity in November to be 86 flights and 255 passengers, but the actual activity was 89 flights and 257 passengers. The actual cost for plane operating costs in November was $305,100. The spending variance for plane operating costs in November would be closest to:

Schoening 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 January. When the company prepared its planning budget at the beginning of January, it assumed that 40 containers would have been refurbished. However, 38 containers were actually refurbished during January.The activity variance for "Refurbishing materials" for January would have been 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 net operating income for May would have been closest to:

Bracken Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,140 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for September:Data used in budgeting: Actual results for September: The spending variance for medical supplies in September would be closest to:

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: The total variable cost at the activity level of 9,700 patient-visits per month should be:

Comparing a static planning budget to actual costs is not a good way to assess whether variable costs are under control.

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 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 June would be closest to:

Wyzard 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 37 containers would have been refurbished. However, 32 containers were actually refurbished during February.The revenue variance in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for February would have been closest to:

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

During June, Tarras Corporation plans to serve 35,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $4.44qWages and salaries: $33,500 + $1.56qSupplies: $0.76qInsurance: $15,000Miscellaneous expense: $4,500 + $0.46qRequired:Prepare the company's planning budget for June.

Varcoe Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 34,500 customers, but actually served 29,500 customers. Revenue is $3.89 per customer served. Wages and salaries are $35,000 per month plus $1.29 per customer served. Supplies are $0.59 per customer served. Insurance is $9,200 per month. Miscellaneous expenses are $7,300 per month plus $0.29 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).

A budget that is based on the actual activity of a period is known as a:

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 food and supplies in the flexible budget for April would be closest to: