Exam 9: Flexible Budgets and Performance Analysis

During February, Barreca Clinic plans for an activity level of 2,700 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits:Revenue: $49.10qPersonnel expenses: $34,100 + $13.20qMedical supplies: $1,300 + $9.40qOccupancy expenses: $8,300 + $1.40qAdministrative expenses: $6,100 + $0.30qRequired: Prepare the clinic's planning budget for February.

Dukette Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for August was based on 2,600 meals, but the diner actually served 2,200 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 report showing the activity variances for each of the expenses and for total expenses for August. Label each variance as favorable (F) or unfavorable (U).

Kaina Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,970 client-visits. The clinic 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 activity variance for personnel expenses in May would be closest to:

Neighbors 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 3,000 tenant-days, but its actual level of activity was 2,960 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 activity variance for administrative expenses in April would be closest to:

Thorman 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 35 customers would have been served. However, 39 customers were actually served during August. Required: Prepare a report showing the company's revenue and spending variances for August. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Sharifi Hospital bases its budgets on patient-visits. The hospital's static budget for October appears below: The total overhead cost at an activity level of 9,200 patient-visits per month should be:

Blakesley 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 January, it assumed that 38 customers would have been served. However, 42 customers were actually served during January. Required: Prepare a report showing the company's activity variances for January. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Mcdougald 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 March. When the company prepared its planning budget at the beginning of March, it assumed that 21 customers would have been served. However, 26 customers were actually served during March.The spending variance for "Employee salaries and wages" for March would have been closest to:

Dubberly Corporation's cost formula for its manufacturing overhead is $30,600 per month plus $64 per machine-hour. For the month of March, the company planned for activity of 7,900 machine-hours, but the actual level of activity was 7,880 machine-hours. The actual manufacturing overhead for the month was $558,610.The spending variance for manufacturing overhead in March would be closest to:

Billafuerte 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 July, the company budgeted for 496 guests and 233 jeeps. The actual activity for the month was 481 guests and 238 jeeps.Required:Prepare the company's planning budget for July.

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 activity variance for direct labor in May would be closest to:

Wisseman 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 September, it assumed that 28 containers would have been refurbished. However, 26 containers were actually refurbished during September.The activity variance for total expenses for September would have been closest to:

Ruozzo 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 July. When the company prepared its planning budget at the beginning of July, it assumed that 27 customers would have been served. However, 22 customers were actually served during July.The amount shown for net operating income in the planning budget for July would have been closest to:

Quesnel Clinic bases its budgets on the activity measure patient-visits. During February, the clinic planned for 3,700 patient-visits, but its actual level of activity was 3,900 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: Required:Prepare a report showing the clinic's activity variances for February. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Taussig Snow Removal's cost formula for its vehicle operating cost is $1,880 per month plus $394 per snow-day. For the month of February, the company planned for activity of 13 snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month was $7,250. The activity variance for vehicle operating cost in February would be closest to:

Brong 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 22 containers would have been refurbished. However, 18 containers were actually refurbished during March.The spending variance for "Employee salaries and wages" for March would have been closest to:

Grohs 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 2,500 tenant-days, but its actual level of activity was 2,530 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the planning budget for December would be closest to:

Smith 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 31 containers would have been refurbished. However, 26 containers were actually refurbished during February. Required: Prepare a report showing the company's revenue and spending variances for February. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

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 spending variance for "Employee salaries and wages" for June would have been closest to:

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 total expenses for October would have been closest to: