Exam 11: Flexible Budgets and Performance Analysis

Rizza 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 April, the school budgeted for 1,350 students and 45 courses. The school's income statement showing the actual results for the month appears below: Required: Prepare a report showing the school's revenue and spending variances for April. Label each variance as favorable (F) or unfavorable (U).

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to:

A flexible budget can be used to determine what costs should have been at a given level of activity.

The wages and salaries in the planning budget for January would be closest to:

The direct materials in the flexible budget for October would be closest to:

The activity variance for direct labor in April would be closest to:

Fussner Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,610 patient-visits and the actual level of activity was 1,670 patient-visits. The cost formula for administrative expenses is $3.30 per patient-visit plus $17,900 per month. The actual administrative expense was $24,600. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:

The manufacturing overhead in the flexible budget for March would be closest to:

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

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

Hertzler Corporation uses customers served as its measure of activity. During November, the company budgeted for 33,000 customers, but actually served 34,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $3.20q Wages and salaries: $26,600 + $1.20q Supplies: $0.40q Insurance: $7,900 Miscellaneous: $6,400 + $0.10q The company reported the following actual results for November: Required: Prepare a report showing the company's revenue and spending variances for November. Label each variance as favorable (F) or unfavorable (U).

Sroufe Clinic bases its budgets on the activity measure patient-visits. During July, the clinic planned for 3,500 patient-visits, but its actual level of activity was 4,000 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare a report showing the clinic's activity variances for July. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

The occupancy expenses in the flexible budget for February would be closest to:

During September, Kocab Corporation plans to serve 37,000 customers. Revenue is $2.80 per customer served. Wages and salaries are $33,300 per month plus $0.80 per customer served. Supplies are $0.40 per customer served. Insurance is $9,000 per month. Miscellaneous expenses are $5,300 per month plus $0.20 per customer served. Required: Prepare the company's planning budget for September.

During February, Poetker Corporation budgeted for 29,000 customers, but actually served 28,000 customers. Revenue should be $4.70 per customer served. Wages and salaries should be $31,700 per month plus $1.50 per customer served. Supplies should be $0.80 per customer served. Insurance should be $8,400 per month. Miscellaneous expenses should be $7,400 per month plus $0.40 per customer served. Required: Prepare the company's flexible budget for February based on the actual level of activity for the month.

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

The cleaning equipment and supplies in the flexible budget for June would be closest to:

Which of the following would not appear on a flexible budget performance report as shown in the text?

The manufacturing overhead in the flexible budget for July would be closest to:

The spending variance for plane operating costs in January would be closest to: