Exam 9: Flexible Budgets and Performance Analysis

Sherburne Snow Removal's cost formula for its vehicle operating cost is $2,510 per month plus $371 per snow-day. For the month of March, the company planned for activity of 18 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $8,460. The vehicle operating cost in the flexible budget for March would be closest to:

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).

A revenue variance is favorable if the actual revenue is greater than the revenue in the static planning budget.

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:

Courington Detailing's cost formula for its materials and supplies is $2,010 per month plus $6 per vehicle. For the month of August, the company planned for activity of 96 vehicles, but the actual level of activity was 56 vehicles. The actual materials and supplies for the month was $2,420.The materials and supplies in the flexible budget for August 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 administrative expenses in October would be closest to:

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

Fixed costs should not be included in a flexible budget because they do not change when the level of activity changes.

Witten 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 27 customers were actually served during January.The "Other expenses" in the flexible budget for January 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:

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:

Aultz Tile Installation Corporation measures its activity in terms of square feet of tile installed. Last month, the budgeted level of activity was 1,180 square feet and the actual level of activity was 1,270 square feet. The company's owner budgets for supply costs, a variable cost, at $3.50 per square foot. The actual supply cost last month was $4,980. In the company's flexible budget performance report for last month, what would have been the spending variance for supply costs?

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 "Employee salaries and wages" for October would have been closest to:

Mcinerney 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 October, the company budgeted for 330 guests and 96 jeeps. The actual activity for the month was 365 guests and 116 jeeps.Required:Prepare the company's flexible budget for the actual level of activity in October.

Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets.

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 flexible budget for July 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 revenue in the company's flexible budget for October would have been 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:

Pratte Boat Wash's cost formula for its cleaning equipment and supplies is $2,460 per month plus $49 per boat. For the month of April, the company planned for activity of 58 boats, but the actual level of activity was 18 boats. The actual cleaning equipment and supplies for the month was $3,470.The cleaning equipment and supplies in the flexible budget for April would be closest to:

Herlocker 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. When the company prepared its planning budget at the beginning of February, it assumed that 26 containers would have been refurbished.The amount shown for revenue in the planning budget for February would have been closest to: