Exam 9: Performance Measurement in Decentralized Organizations

During February, Oshell Clinic budgeted for 3,600 patient-visits, but its actual level of activity was 3,200 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $28.80q Personnel expenses: $22,500 + $9.90q Medical supplies: $1,200 + $4.70q Occupancy expenses: $6,700 + $1.30q Administrative expenses: $4,800 + $0.20q Required: Prepare the clinic's flexible budget for February based on the actual level of activity for the month.

Lartey Corporation's cost formula for its selling and administrative expense is $22,200 per month plus $27 per unit. For the month of December, the company planned for activity of 5,300 units, but the actual level of activity was 5,270 units. The actual selling and administrative expense for the month was $168,150. The spending variance for selling and administrative expense in December would be closest to:

Wall Corporation, which produces commercial safes, has provided the following data: Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies is closest to:

The standard cost card for one unit of a certain finished product shows the following: If the total standard variable cost for one unit of finished product is $85, then the standard price per pound for direct materials is:

The following data have been provided by Petri Corporation: Indirect labor and power are both elements of variable manufacturing overhead. The variable overhead rate variance for power is closest to:

Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the revenue and spending variances report) for July would be closest to:

The standard cost per unit is computed by dividing the standard quantity or hours by the standard price or rate.

Taccone Corporation makes a product that has the following direct labor standards: In February the company produced 4,100 units using 1,120 direct labor-hours. The actual direct labor rate was $20.40 per hour. The labor rate variance for February is:

The revenue and spending variances are the differences between the flexible budget and the actual results for the period.

Pardoe Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: During March, the following activity was recorded by the company: • The company produced 3,000 units during the month. • A total of 8,000 pounds of material were purchased at a cost of $23,000. • There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,000 pounds of material remained in the warehouse. • During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour. • Variable manufacturing overhead costs during March totaled $1,800. The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for March is:

Gastineau Tile Installation Corporation measures its activity in terms of square feet of tile installed. Last month, the budgeted level of activity was 1,230 square feet and the actual level of activity was 1,200 square feet. The company's owner budgets for supply costs, a variable cost, at $2.70 per square foot. The actual supply cost last month was $2,690. In the company's performance report for last month, what would have been the spending variance for supply costs?

During November, Guerreiro Clinic budgeted for 2,200 patient-visits, but its actual level of activity was 2,500 patient-visits. Revenue should be $49.00 per patient-visit. Personnel expenses should be $30,700 per month plus $14.70 per patient-visit. Medical supplies should be $1,800 per month plus $6.50 per patient-visit. Occupancy expenses should be $7,600 per month plus $1.40 per patient-visit. Administrative expenses should be $4,700 per month plus $0.10 per patient-visit. Required: Prepare the clinic's flexible budget for November based on the actual level of activity for the month.

Kari 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 May, the kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,230 tenant-days. The kennel 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 administrative expenses in the planning budget for May would be closest to:

Zike Corporation's static planning budget for October appears below. The company bases its budgets on machine-hours. In October, the actual number of machine-hours was 6,000, the actual supplies cost was $14,740, the actual power cost was $49,170, the actual salaries cost was $15,390, and the actual equipment depreciation was $63,670. The spending variance for equipment depreciation in the performance report for the month should be:

Nicolini 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 2,200 tenant-days, but its actual level of activity was 2,250 tenant-days. The kennel 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 food and supplies in the flexible budget for October would be closest to:

Epley Corporation makes a product with the following standard costs: In July the company produced 3,300 units using 12,240 pounds of the direct material and 2,760 direct labor-hours. During the month, the company purchased 13,000 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for July is:

Loomer 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 $550 per month plus $95 per job plus $21 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 July to be 12 jobs and 136 meals, but the actual activity was 13 jobs and 137 meals. The actual cost for catering supplies in July was $4,770. The catering supplies in the planning budget for July would be closest to:

Ohme Framing's cost formula for its supplies cost is $1,620 per month plus $13 per frame. For the month of April, the company planned for activity of 882 frames, but the actual level of activity was 878 frames. The actual supplies cost for the month was $13,500. The supplies cost in the flexible budget for April would be closest to:

Pearle Corporation makes automotive engines. For the most recent month, budgeted production was 3,300 engines. The standard power cost is $9.20 per machine-hour. The company's standards indicate that each engine requires 2.1 machine-hours. Actual production was 3,400 engines. Actual machine-hours were 7,160 machine-hours. Actual power cost totaled $61,815. Required: Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable. Show your work!

Sperazza Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 4,900 doors. Actual production was 5,300 doors. According to standards, each door requires 6.4 machine-hours. The actual machine-hours for the month were 34,340 machine-hours. The standard supplies cost is $3.10 per machine-hour. The actual supplies cost for the month was $99,331. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is: