Exam 9: Flexible Budgets and Performance Analysis

Ruge Clinic bases its budgets on the activity measure patient-visits. During November, the clinic planned for 2,100 patient-visits, but the actual level of activity was 2,300 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 November. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Pickrel 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. When the company prepared its planning budget at the beginning of November, it assumed that 27 wells would have been serviced. However, 31 wells were actually serviced during November.The amount shown for "Servicing materials" in the planning budget for November would have been closest to:

Varriano Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 50,000 customers, but actually served 51,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Required:Prepare a report showing the company's activity variances for October. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

A favorable spending variance occurs when the actual cost is less than the amount of the cost in the static planning budget.

Poling Clinic bases its budgets on the activity measure patient-visits. During July, the clinic planned for 3,600 patient-visits, but its actual level of activity was 4,000 patient-visits. Revenue should be $30.40 per patient-visit. Personnel expenses should be $30,000 per month plus $9.30 per patient-visit. Medical supplies should be $1,000 per month plus $3.70 per patient-visit. Occupancy expenses should be $9,300 per month plus $0.80 per patient-visit. Administrative expenses should be $4,300 per month plus $0.30 per patient-visit.Required:Prepare a report showing the clinic's activity variances for July. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

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:

Tuton Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for July was based on 3,200 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 spending variances for each of the expenses and for total expenses for July. Label each variance as favorable (F) or unfavorable (U).

Reef Slithering Riverboat Tours is a tour boat company that takes guests on a tour of the Mississippi river. The company bases its budgets on two measures of activity (i.e., cost drivers), guests and riverboats. Each time a riverboat is used in a tour it counts as one riverboat for budgeting purposes. Each riverboat has one tour guide. The company uses the following data in its budgeting: During August, the company budgeted for 22 riverboats and 785 guests. The actual activity for August was 19 riverboats 710 guests. Required: Prepare a planning budget, a flexible budget, and a performance report showing the company's activity and revenue and spending variances for August. On the performance report indicate in each case whether the variance is favorable (F) or unfavorable (U).

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

Groupe 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 $36,270 per month plus $2,064 per flight plus $1 per passenger. The company expected its activity in October to be 87 flights and 237 passengers, but the actual activity was 86 flights and 242 passengers. The actual cost for plane operating costs in October was $211,010. The activity variance for plane operating costs in October would be closest to:

Bickel Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of November: Required:Prepare the company's flexible budget performance report for November. Label each variance as favorable (F) or unfavorable (U).

Herrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $570 per month plus $98 per job plus $24 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in December to be 11 jobs and 98 meals, but the actual activity was 14 jobs and 102 meals. The actual cost for catering supplies in December was $4,500. The spending variance for catering supplies in December would be closest to:

Quesnel Clinic bases its budgets on the activity measure patient-visits. During February, the clinic planned for 2,800 patient-visits, but its actual level of activity was 3,000 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).

Willow Clinic bases its budgets on patient-visits. During October, the clinic plans for a level of activity of 2,100 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: Required:Prepare the clinic's planning budget for October.

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below: The total cost at the activity level of 5,200 guest-days per month should be:

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 325 guests and 91 jeeps. The actual activity for the month was 340 guests and 96 jeeps.Required:Prepare the company's flexible budget for the actual level of activity in October.

Pratte Boat Wash's cost formula for its cleaning equipment and supplies is $2,590 per month plus $50 per boat. For the month of April, the company planned for activity of 55 boats, but the actual level of activity was 14 boats. The actual cleaning equipment and supplies for the month was $3,350.The spending variance for cleaning equipment and supplies in April would be closest to:

Boan 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 August, the school budgeted for 1,590 students and 110 courses. The school's income statement showing the actual results for the month appears below: Required:Prepare a report showing the school's activity variances for August. Label each variance as favorable (F) or unfavorable (U).

Dubberly Corporation's cost formula for its manufacturing overhead is $31,000 per month plus $66 per machine-hour. For the month of March, the company planned for activity of 7,980 machine-hours, but the actual level of activity was 7,920 machine-hours. The actual manufacturing overhead for the month was $580,570.The spending variance for manufacturing overhead in March would be closest to: