Exam 9: Performance Measurement in Decentralized Organizations

Sinopoli Corporation bases its budgets on machine-hours. The company's static planning budget for September appears below: Required: Prepare a flexible budget for 8,600 machine-hours per month.

During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

Hepburn Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,200 client-visits, but its actual level of activity was 3,180 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for July: The net operating income in the planning budget for July would be closest to:

Carvana Clinic uses patient-visits as its measure of activity. During December, the clinic budgeted for 3,400 patient-visits, but its actual level of activity was 3,100 patient-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: Required: Prepare a report showing the clinic's revenue and spending variances for December. Label each variance as favorable (F) or unfavorable (U).

Ruetz Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 2,500 client-visits, but its actual level of activity was 2,520 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: The medical supplies in the flexible budget for November would be closest to:

During April, Cheatam Corporation budgeted for 27,000 customers, but actually served 23,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $4.10q Wages and salaries: $33,300 + $1.10q Supplies: $0.70q Insurance: $8,600 Miscellaneous expense: $3,700 + $0.40q Required: Prepare the company's flexible budget for April based on the actual level of activity for the month.

Eberley Corporation's cost formula for its manufacturing overhead is $25,700 per month plus $10 per machine-hour. For the month of July, the company planned for activity of 5,900 machine-hours, but the actual level of activity was 5,920 machine-hours. The actual manufacturing overhead for the month was $86,800. The manufacturing overhead in the flexible budget for July would be closest to:

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 rate variance for March is:

During August, Kociolek Clinic plans for an activity level of 2,800 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $28.20q Personnel expenses: $22,200 + $7.60q Medical supplies: $1,100 + $5.20q Occupancy expenses: $5,100 + $1.00q Administrative expenses: $3,200 + $0.40q Required: Prepare the clinic's planning budget for August.

Gilson Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 5,100 units, but its actual level of activity was 5,060 units. The company 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 spending variance for direct materials in April would be closest to:

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor rate variance for the month?

Larance Detailing's cost formula for its materials and supplies is $2,230 per month plus $1 per vehicle. For the month of November, the company planned for activity of 75 vehicles, but the actual level of activity was 25 vehicles. The actual materials and supplies for the month was $2,160. The spending variance for materials and supplies in November would be closest to:

Payeur Corporation uses customers served as its measure of activity. The company bases its budgets on the following information: Revenue should be $4.50 per customer served. Wages and salaries should be $38,300 per month plus $1.40 per customer served. Supplies should be $0.80 per customer served. Insurance should be $10,100 per month. Miscellaneous expenses should be $5,400 per month plus $0.40 per customer served. The company reported the following actual results for December: Required: Prepare a report showing the company's revenue and spending variances for December. Label each variance as favorable (F) or unfavorable (U).

The following direct labor standards have been established for product S57S: The following data pertain to last month's operations: Required: a. What was the labor rate variance for the month? b. What was the labor efficiency variance for the month?

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 labor efficiency variance for April is:

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 selling and administrative expense in the planning budget for December would be closest to:

Federick Clinic uses client-visits as its measure of activity. During October, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 3,040 client-visits. The clinic 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 personnel expenses in the planning budget for October would be closest to:

Smithj 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 3,500 tenant-days, but its actual level of activity was 3,490 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 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 February 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 rate variance for April is:

Peixoto Framing's cost formula for its supplies cost is $1,150 per month plus $14 per frame. For the month of July, the company planned for activity of 556 frames, but the actual level of activity was 555 frames. The actual supplies cost for the month was $9,190. The supplies cost in the planning budget for July would be closest to: