Exam 9: Flexible Budgets and Performance Analysis

Feemster 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 6,050 units, but its actual level of activity was 6,000 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:Data used in budgeting: Actual results for October: The activity variance for selling and administrative expenses in October would be closest to:

Westby Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for February was based on 3,900 meals, but the diner actually served 4,400 meals. The diner's director has provided the following cost data to use in the budget: groceries, $3.05 per meal; kitchen operations, $5,500 per month plus $1.40 per meal; administrative expenses, $3,300 per month plus $0.80 per meal; and fundraising expenses, $1,500 per month.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.

Rients 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 October. When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October.The spending variance for "Travel expenses" for October would have been 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 net operating income in the flexible budget for January would be closest to:

Manter Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,900 units, but its actual level of activity was 6,940 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:Data used in budgeting: Actual results for June: The selling and administrative expenses in the planning budget for June would be closest to:

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: The total cost at the activity level of 9,400 patient-visits per month should be:

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 administrative expenses in the planning budget for December would be closest to:

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 activity variance for administrative expenses in December would be closest to:

A revenue variance is unfavorable if the revenue in the static planning budget is less than the revenue in the flexible budget.

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 activity variance for net operating income in February would be closest to:

An activity variance is the difference between an actual revenue or cost and the revenue or cost in the flexible budget that is adjusted for the actual level of activity of the period.

Rudick 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 July, it assumed that 34 wells would have been serviced. However, 36 wells were actually serviced during July.The activity variance for revenue for July would have been closest to:

Guareno Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,450 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 administrative expenses in the planning budget for December would be closest to:

Tennies Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 4,100 client-visits, but its actual level of activity was 4,090 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 spending variance for medical supplies in November would be closest to:

Kekiwi Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 6,900 units, but its actual level of activity was 6,910 units. The company 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 net operating income in the flexible budget for January would be closest to:

Faulks 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 August, it assumed that 23 containers would have been refurbished. However, 26 containers were actually refurbished during August.The amount shown for total expenses in the planning budget for August would have been closest to:

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 "Other expenses" for May would have been closest to:

When using a flexible budget, a decrease in activity within the relevant range:

Medlar Corporation's static planning budget for June appears below. The company bases its budgets on machine-hours. In June, the actual number of machine-hours was 9,300, the actual supplies cost was $19,760, the actual power cost was $35,720, the actual salaries cost was $27,130, and the actual equipment depreciation was $39,430.The spending variance for power cost in the flexible budget performance report for the month should be:

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 "Other expenses" in the flexible budget for October would have been closest to: