Exam 9: Performance Measurement in Decentralized Organizations

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 facility expenses in the flexible budget for May would be closest to:

Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The company 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 revenue variance for July would be closest to:

The following standards have been established for a raw material used to make product I92: The following data pertain to a recent month's operations: The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month?

Camcam Corporation uses customers served as its measure of activity. During July, the company budgeted for 26,000 customers, but actually served 30,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $4.90q Wages and salaries: $34,400 + $1.60q Supplies: $1.00q Insurance: $8,500 Miscellaneous expense: $5,600 + $0.20q The company reported the following actual results for July: Required: Prepare a report showing the company's revenue and spending variances for July. Label each variance as favorable (F) or unfavorable (U).

Jurczyk Corporation makes a product that has the following direct labor standards: In December the company's budgeted production was 4,600 units, but the actual production was 4,400 units. The company used 1,330 direct labor-hours to produce this output. The actual direct labor cost was $14,364. The labor efficiency variance for December is:

Fixed costs should be included in a flexible budget even though they do not change when the level of activity changes.

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 variable overhead efficiency variance for July is:

Cruea 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 November, the school budgeted for 1,410 students and 138 courses. The actual activity for the month was 1,810 students and 139 courses. Required: Prepare the school's planning budget for November.

Blaney 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 456 guests and 115 jeeps. The actual activity for the month was 446 guests and 111 jeeps. Required: Prepare the company's flexible budget for the actual level of activity in October.

Oddo Corporation makes a product with the following standard costs: The company reported the following results concerning this product in December. 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 December is:

Ortman Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. 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 materials price variance for May is:

Paye Clinic uses patient-visits as its measure of activity. The following report compares the planning budget to the actual operating results for the month of January: Required: Prepare a report showing the clinic's revenue and spending variances for January. Label each variance as favorable (F) or unfavorable (U).

Lantagne Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,800 client-visits, but its actual level of activity was 3,820 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 net operating income in the flexible budget for May would be closest to:

A spending variance is the difference between the cost in the static planning budget and the actual amount of the cost for the period.

Bronfenbrenner Co. uses a standard cost system for its single product in which variable overhead is applied on the basis of direct labor hours. The following information is given: Standard costs per unit: Actual experience for current year: Required: Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: a. Direct materials price variance. b. Direct materials quantity variance. c. Labor rate variance. d. Labor efficiency variance. e. Variable overhead rate variance. f. Variable overhead efficiency variance.

Berends Corporation makes a product with the following standard costs: The company reported the following results concerning this product in April. 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 variable overhead rate variance for April is:

Illescas 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 6,400 units, but its actual level of activity was 6,440 units. The company has provided the following data concerning the formulas to be used in its budgeting: The direct labor in the planning budget for December would be closest to:

Midgley Corporation makes a product whose direct labor standards are 0.8 hours per unit and $22.00 per hour. In April the company produced 6,900 units using 5,250 direct labor-hours. The actual direct labor cost was $113,925. The labor efficiency variance for April is:

Gilder Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. 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 rate variance for June is:

Dancause 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 5,090 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 October would be closest to: