Exam 11: Flexible Budgets and Performance Analysis

Oscarson Midwifery's cost formula for its wages and salaries is $2,720 per month plus $351 per birth. For the month of September, the company planned for activity of 121 births, but the actual level of activity was 119 births. The actual wages and salaries for the month was $43,380. The wages and salaries in the planning budget for September would be closest to:

Which of the following comparisons best isolates the impact of a change in activity on performance?

The personnel expenses in the planning budget for May would be closest to:

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

Whit 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 $380 per month plus $94 per job plus $11 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 October to be 20 jobs and 216 meals, but the actual activity was 19 jobs and 221 meals. The actual cost for catering supplies in October was $4,790. The catering supplies in the flexible budget for October would be closest to:

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

Adeyemo Clinic uses patient-visits as its measure of activity. During July, the clinic budgeted for 2,500 patient-visits, but its actual level of activity was 2,800 patient-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: Required: Prepare the clinic's flexible budget performance report for July. Label each variance as favorable (F) or unfavorable (U).

The activity variance for revenue is unfavorable if the revenue in the flexible budget is less than the revenue in the static planning budget.

Ehrler 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 March, the company budgeted for 328 guests and 143 jeeps. The actual activity for the month was 338 guests and 147 jeeps. Required: Prepare the company's flexible budget for the actual level of activity in March.

The personnel expenses in the planning budget for October would be closest to:

The selling and administrative expenses in the planning budget for October would be closest to:

The direct labor in the planning budget for October would be closest to:

Heitkamp 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 July, the school budgeted for 1,530 students and 58 courses. The school's income statement showing the actual results for the month appears below: Required: Prepare a report showing the school's activity variances for July. Label each variance as favorable (F) or unfavorable (U).

During January, Agron Clinic plans for an activity level of 2,500 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $51.50q Personnel expenses: $33,800 + $16.60q Medical supplies: $700 + $7.40q Occupancy expenses: $10,900 + $2.10q Administrative expenses: $4,300 + $0.40q Required: Prepare the clinic's planning budget for January.

Schoeppner Corporation uses customers served as its measure of activity. During October, the company budgeted for 39,000 customers, but actually served 42,000 customers. The company bases its budgets on the following information: Revenue should be $3.10 per customer served. Wages and salaries should be $38,100 per month plus $0.80 per customer served. Supplies should be $0.40 per customer served. Insurance should be $9,600 per month. Miscellaneous expenses should be $3,400 per month plus $0.40 per customer served. The company reported the following actual results for October: Required: Prepare the company's flexible budget performance report for October. Label each variance as favorable (F) or unfavorable (U).

A favorable spending variance occurs when the actual cost exceeds the amount of that cost in the flexible budget.

The net operating income in the flexible budget for December would be closest to:

The spending variance for facility expenses in March would be closest to:

Zindell Corporation bases its budgets on the activity measure customers served. During December, the company planned to serve 21,000 customers, but actually served 19,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.60q Wages and salaries: $21,300 + $1.10q Supplies: $0.70q Insurance: $6,400 Miscellaneous: $3,200 + $0.20q Required: Prepare a report showing the company's activity variances for December. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Barona Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for March was based on 2,900 meals, but the diner actually served 3,000 meals. The diner's director has provided the following cost formulas to use in budgets: Required: Prepare the diner's flexible budget for the actual number of meals served in March. The budget will only contain the costs listed above; no revenues will be on the budget.