Exam 9: Flexible Budgets and Performance Analysis

Rivero 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 22 containers would have been refurbished. Required: Prepare the company's planning budget for September.

To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity.

Bade Midwifery's cost formula for its wages and salaries is $1,250 per month plus $244 per birth. For the month of October, the company planned for activity of 105 births, but the actual level of activity was 101 births. The actual wages and salaries for the month was $26,915. The activity variance for wages and salaries in October would be closest to:

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 $490 per month plus $109 per job plus $29 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 19 jobs and 129 meals, but the actual activity was 12 jobs and 112 meals. The actual cost for catering supplies in December was $5,630. The spending variance for catering supplies in December would be closest to:

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 total expenses in the planning budget for November 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 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 September 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 wages and salaries in October would be closest to:

Thilking Midwifery's cost formula for its wages and salaries is $2,140 per month plus $454 per birth. For the month of August, the company planned for activity of 102 births, but the actual level of activity was 100 births. The actual wages and salaries for the month was $47,660. The wages and salaries in the flexible budget for August would be closest to:

Varcoe Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 30,000 customers, but actually served 25,000 customers. Revenue is $3.80 per customer served. Wages and salaries are $34,100 per month plus $1.20 per customer served. Supplies are $0.50 per customer served. Insurance is $8,300 per month. Miscellaneous expenses are $6,400 per month plus $0.20 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).

Bonavita 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 July, it assumed that 33 customers would have been served.The amount shown for net operating income in the planning budget for July would have been closest to:

Pittman Framing's cost formula for its supplies cost is $1,040 per month plus $14 per frame. For the month of November, the company planned for activity of 614 frames, but the actual level of activity was 604 frames. The actual supplies cost for the month was $9,200. The spending variance for supplies cost in November would be 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 activity variance for administrative expenses in November would be closest to:

Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,500 client-visits, but its actual level of activity was 3,490 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 activity variance for net operating income in January would be closest to:

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 activity variance for wages and salaries in April would be closest to:

Ibsen Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,340 client-visits. The clinic 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 occupancy expenses in the flexible budget for December would be 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 "Other expenses" for October would have been closest to:

Mansour Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for February was based on 3,000 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 the diner's flexible budget for the actual number of meals served in February. The budget will only contain the costs listed above; no revenues will be on the budget.

Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,000 client-visits, but its actual level of activity was 2,010 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: The activity variance for personnel expenses in July would be closest to:

Otomo 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 366 guests and 136 jeeps. The company's income statement showing the actual results for the month appears below: Required:Prepare a report showing the company's activity variances for July. Label each variance as favorable (F) or unfavorable (U).

Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,900 client-visits, but its actual level of activity was 3,890 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 activity variance for personnel expenses in November would be closest to: