Exam 8: Flexible Budgets and Performance Analysis

Riggan 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 December,the school budgeted for 1,970 students and 163 courses.The school's income statement showing the actual results for the month appears below: Required: Prepare a flexible budget performance report showing both the school's activity variances and revenue and spending variances for December.Label each variance as favorable (F)or unfavorable (U).

Burau Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 5,500 units, but its actual level of activity was 5,510 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: -The spending variance for direct materials in January would be closest to:

Lantto Air uses two measures of activity,flights and passengers,in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $34,810 per month plus $2,850 per flight plus $12 per passenger.The company expected its activity in June to be 70 flights and 292 passengers,but the actual activity was 69 flights and 291 passengers.The actual cost for plane operating costs in June was $236,550.The plane operating costs in the flexible budget for June would be closest to:

Nussey Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 2,100 client-visits, but its actual level of activity was 2,050 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 spending variance for medical supplies in May would be closest to:

Clore 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 March, the kennel budgeted for 2,900 tenant-days, but its actual level of activity was 2,920 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: -The spending variance for facility expenses in March would be closest to:

Glassey Clinic uses patient-visits as its measure of activity.The clinic bases its budgets on the following information: Revenue should be $41.80 per patient-visit.Personnel expenses should be $35,400 per month plus $10.60 per patient-visit.Medical supplies should be $700 per month plus $7.90 per patient-visit.Occupancy expenses should be $8,800 per month plus $1.30 per patient-visit.Administrative expenses should be $5,600 per month plus $0.40 per patient-visit. The clinic reported the following actual results for February: Required: Prepare a report showing the clinic's revenue and spending variances for February.Label each variance as favorable (F)or unfavorable (U).

Privitera Printing uses two measures of activity, press runs and book set-ups, in the cost formulas in its budgets and performance reports. The cost formula for wages and salaries is $7,220 per month plus $650 per press run plus $1,110 per book set-up. The company expected its activity in January to be 188 press runs and 117 book set-ups, but the actual activity was 191 press runs and 114 book set-ups. The actual cost for wages and salaries in January was $269,270. -The activity variance for wages and salaries in January would be closest to:

While fixed costs should not be affected by a change in the level of activity within the relevant range,they may change for other reasons.

Rushton Hospital bases its budgets on patient-visits. The hospital's static planning budget for May appears below: Actual results for the month were: -The spending variance for laundry costs in the flexible budget performance report for the month is:

Clore 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 March, the kennel budgeted for 2,900 tenant-days, but its actual level of activity was 2,920 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: -The wages and salaries in the planning budget for March would be closest to:

Cadavieco Detailing's cost formula for its materials and supplies is $1,990 per month plus $8 per vehicle. For the month of November, the company planned for activity of 92 vehicles, but the actual level of activity was 52 vehicles. The actual materials and supplies for the month was $2,440. -The materials and supplies in the planning budget for November would be closest to:

Herard Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 7,900 units, but its actual level of activity was 7,890 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: -The manufacturing overhead in the flexible budget for March would be closest to:

Foxworthy 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 July, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 2,050 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The administrative expenses in the planning budget for July would be closest to:

Bamba Corporation's cost formula for its selling and administrative expense is $47,900 per month plus $52 per unit. For the month of April, the company planned for activity of 6,000 units, but the actual level of activity was 5,960 units. The actual selling and administrative expense for the month was $364,490. -The selling and administrative expense in the planning budget for April would be closest to:

Tajiri Corporation uses customers served as its measure of activity.The following report compares the planning budget to the actual operating results for the month of May: Required: Prepare the company's flexible budget performance report for May.Label each variance as favorable (F)or unfavorable (U).

Flexible budgets cannot be used when there is more than one cost driver (i.e. ,measure of activity).

Diiorio Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 2,700 client-visits, but its actual level of activity was 2,750 client-visits. The clinic 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 medical supplies in the flexible budget for February would be closest to:

Clore 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 March, the kennel budgeted for 2,900 tenant-days, but its actual level of activity was 2,920 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: -The activity variance for administrative expenses in March would be closest to:

Langner Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,740 client-visits. The clinic 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 occupancy expenses in the flexible budget for February would be closest to:

Askland Clinic uses client-visits as its measure of activity. During October, the clinic budgeted for 3,100 client-visits, but its actual level of activity was 3,130 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: