Exam 9: Flexible Budgets and Performance Analysis

Adamyan Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for May was based on 3,700 meals, but the diner actually served 3,200 meals. The diner's director has provided the following cost data to use in the budget: groceries, $2.10 per meal; kitchen operations, $5,700 per month plus $1.55 per meal; administrative expenses, $3,800 per month plus $0.35 per meal; and fundraising expenses, $1,500 per month. 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 May.

Prestridge 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 31 customers would have been served. However, 29 customers were actually served during August.The variance for net operating income in the Revenue and Spending Variances column of a report comparing actual results to the flexible budget for August would have been closest to:

Tessmer 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 January, the kennel budgeted for 3,100 tenant-days, but its actual level of activity was 3,090 tenant-days. The kennel 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 facility expenses in the flexible budget for January would be closest to:

Milot 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 April. When the company prepared its planning budget at the beginning of April, it assumed that 32 wells would have been serviced. However, 29 wells were actually serviced during April.The activity variance for total expenses for April would have been closest to:

Benjamin 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 March, it assumed that 26 containers would have been refurbished. However, 23 containers were actually refurbished during March.The amount shown for revenue in the planning budget for March would have been closest to:

Sunn Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 6,100 units, but its actual level of activity was 6,050 units. The company has provided the following data concerning the formulas to be used in its budgeting: The manufacturing overhead in the flexible budget for November would be closest to:

Tomlison Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,150 units. The company has provided the following data concerning the formulas to be used in its budgeting: The selling and administrative expenses in the planning budget for October would be closest to:

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 "Travel expenses" in the flexible budget for January would have been closest to:

Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company 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 net operating income in the flexible budget for December would be closest to:

Tomlison Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,150 units. The company has provided the following data concerning the formulas to be used in its budgeting: The direct materials in the flexible budget for October would be closest to:

Gayner 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 November. When the company prepared its planning budget at the beginning of November, it assumed that 30 wells would have been serviced. However, 34 wells were actually serviced during November.The spending variance for "Servicing materials" for November would have been closest to:

Lenci 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 5,100 units, but its actual level of activity was 5,050 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 spending variance for direct materials in May would be closest to:

A flexible budget report should exclude variable costs because they can be expected to change with a change in the level of activity.

During April, Shvey Clinic plans for an activity level of 2,100 patient-visits. Revenue is $48.10 per patient-visit. Personnel expenses are $28,800 per month plus $12.30 per patient-visit. Medical supplies are $1,300 per month plus $8.10 per patient-visit. Occupancy expenses are $8,100 per month plus $2.00 per patient-visit. Administrative expenses are $2,900 per month plus $0.20 per patient-visit.Required:Prepare the clinic's planning budget for April.

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 administrative expenses in May would be closest to:

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 7,400 units, but its actual level of activity was 7,350 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 revenue variance for May would be closest to:

Which of the following may appear on a flexible budget performance report?

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

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below: The total fixed cost at the activity level of 5,500 guest-days per month should be:

During June, Tarras Corporation plans to serve 36,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:Revenue: $3.50qWages and salaries: $35,100 + $0.90qSupplies: $0.70qInsurance: $8,500Miscellaneous expense: $4,100 + $0.30qRequired: Prepare the company's planning budget for June.