Exam 2: Flexible Budgets and Performance Analysis

Sund Corporation bases its budgets on the activity measure customers served. During April, the company plans to serve 38,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare the company's planning budget for April.

Wragg Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for July was based on 2,500 meals, but the diner actually served 2,400 meals. The diner's director has provided the following cost data to use in the budget: groceries, $3.10 per meal; kitchen operations, $5,800 per month plus $1.50 per meal; administrative expenses, $3,600 per month plus $0.60 per meal; and fundraising expenses, $1,600 per month. The director has also provided the diner's statement of actual expenses for the month: Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for July.

Gastineau Tile Installation Corporation measures its activity in terms of square feet of tile installed. Last month, the budgeted level of activity was 1,230 square feet and the actual level of activity was 1,200 square feet. The company's owner budgets for supply costs, a variable cost, at $2.70 per square foot. The actual supply cost last month was $2,690. In the company's flexible budget performance report for last month, what would have been the spending variance for supply costs?

Capilla Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for October is to be based on 3,300 meals. The diner's director has provided the following cost data to use in the budget: groceries, $2.85 per meal; kitchen operations, $4,100 per month plus $1.25 per meal; administrative expenses, $3,400 per month plus $0.40 per meal; and fundraising expenses, $1,800 per month. Required: Prepare the diner's budget for the month of October. The budget will only contain the costs listed above; no revenues will be on the budget.

Hammes Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, 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 to be used in its budgeting: -The activity variance for direct labor in February would be closest to:

Perla 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 2,200 tenant-days, but its actual level of activity was 2,160 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 wages and salaries in March would be closest to:

Vanderhyde 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 May, the kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,340 tenant-days. The kennel 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 wages and salaries in the planning budget for May 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 spending variance for occupancy expenses in October would be closest to:

Hottle 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 February, the company budgeted for 342 guests and 146 jeeps. The company's income statement showing the actual results for the month appears below: Required: Prepare a flexible budget performance report showing both the company's activity variances and revenue and spending variances for February. Label each variance as favorable (F) or unfavorable (U).

During February, Oshell Clinic budgeted for 3,600 patient-visits, but its actual level of activity was 3,200 patient-visits. The clinic uses the following revenue and cost formulas in its budgeting, where q is the number of patient-visits: Revenue: $28.80q Personnel expenses: $22,500 + $9.90q Medical supplies: $1,200 + $4.70q Occupancy expenses: $6,700 + $1.30q Administrative expenses: $4,800 + $0.20q Required: Prepare the clinic's flexible budget for February based on the actual level of activity for the month.

Monard Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,710 client-visits. The clinic 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 activity variance for personnel expenses in January would be closest to:

Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true?

Fuhrer Hotel bases its budgets on guest-days. The hotel's static budget for December appears below: The total overhead cost at an activity level of 7,500 guest-days per month should be:

Leaphart 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 May, the kennel budgeted for 2,800 tenant-days, but its actual level of activity was 2,840 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The net operating income in the planning budget for May would be closest to:

Tabeling 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 6,500 units, but its actual level of activity was 6,540 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: Data used in budgeting: Actual results for August: -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 August would be closest to:

Hagel Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,300 client-visits, but its actual level of activity was 2,320 client-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: -The spending variance for medical supplies in July would be closest to:

Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.

Coody Clinic uses patient-visits as its measure of activity. The clinic has provided the following report: Required: Prepare the clinic's flexible budget performance report for July. Label each variance as favorable (F) or unfavorable (U).

Illescas Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 6,400 units, but its actual level of activity was 6,440 units. The company has provided the following data concerning the formulas to be used in its budgeting: -The net operating income in the planning budget for December would be closest to:

Pettry Snow Removal's cost formula for its vehicle operating cost is $2,170 per month plus $408 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $7,600. The vehicle operating cost in the planning budget for December would be closest to: