Exam 10: Flexible Budgets and Performance Analysis

Gorley 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 3,900 tenant-days, but its actual level of activity was 3,940 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for net operating income in February would be closest to:

Woofter 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 7,600 units, but its actual level of activity was 7,560 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January: -The activity variance for net operating income in January would be closest to:

Legorreta 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 November: Required: Prepare the company's flexible budget performance report for November. Label each variance as favorable (F) or unfavorable (U).

Elizarraras 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 $39,820 per month plus $2,938 per flight plus $8 per passenger. The company expected its activity in June to be 64 flights and 229 passengers, but the actual activity was 66 flights and 225 passengers. The actual cost for plane operating costs in June was $234,570. The plane operating costs in the planning budget for June would be closest to:

Immen Corporation bases its budgets on the activity measure customers served. During May, the company planned to serve 38,000 customers. The company has provided the following data concerning the formulas its uses in its budgeting: The company has also furnished its income statement for May: Required: Prepare a report showing the company's activity variances for May. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Gamon Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for April was based on 3,600 meals. The diner's director has provided the following cost formulas to use in budgets: The director has also provided the diner's statement of actual expenses for the month: Required: Prepare a flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for April. Label each variance as favorable (F) or unfavorable (U).

Guy Corporation uses customers served as its measure of activity. During January, the company budgeted for 32,000 customers, but actually served 35,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $4.20q Wages and salaries: $33,900 + $1.40q Supplies: $0.60q Insurance: $10,000 Miscellaneous: $7,000 + $0.40q The company reported the following actual results for January: Required: Prepare the company's flexible budget performance report for January. Label each variance as favorable (F) or unfavorable (U).

Moorhouse Clinic uses client-visits as its measure of activity. During December, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: -The activity variance for personnel expenses in December would be closest to:

Buffaloe Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 5,200 units, but its actual level of activity was 5,250 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: -The activity variance for selling and administrative expenses in August would be closest to:

Rising Framing's cost formula for its supplies cost is $2,210 per month plus $10 per frame. For the month of January, the company planned for activity of 710 frames, but the actual level of activity was 705 frames. The actual supplies cost for the month was $9,500. The supplies cost in the flexible budget for January would be closest to:

Dunklin Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,620 patient-visits and the actual level of activity was 1,540 patient-visits. The cost formula for administrative expenses is $3.20 per patient-visit plus $14,300 per month. The actual administrative expense was $21,050. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:

Brynteson Corporation bases its budgets on the activity measure customers served. During September, the company planned to serve 24,000 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: $2.90q Wages and salaries: $24,700 + $0.90q Supplies: $0.40q Insurance: $4,900 Miscellaneous: $2,800 + $0.10q Required: Prepare a report showing the company's activity variances for September. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Genito Corporation's static planning budget for October appears below. The company bases its budgets on machine-hours. In October, the actual number of machine-hours was 8,800, the actual supplies cost was $69,450, the actual power cost was $34,190, the actual salaries cost was $86,490, and the actual equipment depreciation was $37,600. -The spending variance for supplies cost in the flexible budget performance report for the month should be:

Bessey Hospital bases its budgets on patient-visits. The hospital's static planning budget for January appears below: -The spending variance for occupancy costs in the flexible budget performance report for the month is:

Mcduffey Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for September was based on 2,900 meals, but the diner actually served 2,800 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 September. The budget will only contain the costs listed above; no revenues will be on the budget.

Lampert 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 6,100 units, but its actual level of activity was 6,060 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March: -The activity variance for selling and administrative expenses in March would be closest to:

Pollica Corporation's cost formula for its selling and administrative expense is $11,400 per month plus $94 per unit. For the month of March, the company planned for activity of 5,700 units, but the actual level of activity was 5,660 units. The actual selling and administrative expense for the month was $522,860. -The selling and administrative expense in the planning budget for March would be closest to:

Henkel Clinic uses client-visits as its measure of activity. During November, the clinic budgeted for 3,600 client-visits, but its actual level of activity was 3,550 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for November: -The occupancy expenses in the flexible budget for November would be closest to:

A revenue variance is unfavorable if the actual revenue is less than what the revenue should have been for the actual level of activity for the period.

Smithson Clinic uses client-visits as its measure of activity. During May, the clinic budgeted for 3,300 client-visits, but its actual level of activity was 3,270 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May: -The occupancy expenses in the flexible budget for May would be closest to: