Exam 2: Flexible Budgets and Performance Analysis

Fortmann 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 September, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 2,010 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for wages and salaries in September would be closest to:

A planning budget is prepared before the period begins and is valid for whatever the actual level of activity turns out to be.

A major weakness of flexible budgets is that:

Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The company 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 revenue variance for July would be closest to:

Linscott Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 5,400 units, but its actual level of activity was 5,380 units. The company 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 activity variance for selling and administrative expenses in July would be closest to:

Lartey Corporation's cost formula for its selling and administrative expense is $22,200 per month plus $27 per unit. For the month of December, the company planned for activity of 5,300 units, but the actual level of activity was 5,270 units. The actual selling and administrative expense for the month was $168,150. -The activity variance for selling and administrative expense in December would be closest to:

An unfavorable spending variance may reflect waste as well as paying too much for inputs.

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

Gershon 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 $38,720 per month plus $2,061 per flight plus $9 per passenger. The company expected its activity in June to be 76 flights and 238 passengers, but the actual activity was 75 flights and 239 passengers. The actual cost for plane operating costs in June was $196,310. The spending variance for plane operating costs in June would be closest to:

During May, Cockrel Corporation plans to serve 34,000 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: $25,400 + $0.90q Supplies: $0.40q Insurance: $7,000 Miscellaneous expense: $4,900 + $0.30q Required: Prepare the company's planning budget for May.

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

Hairston Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 7,700 units, but its actual level of activity was 7,720 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Actual results for November: -The activity variance for direct labor in November would be closest to:

Spirer Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During September, the company budgeted for 6,700 units, but its actual level of activity was 6,750 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for September: Data used in budgeting: Actual results for September: -The activity variance for direct labor in September would be closest to:

Hepburn Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,200 client-visits, but its actual level of activity was 3,180 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for July: -The personnel expenses in the planning budget for July would be closest to:

Loomer 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 $550 per month plus $95 per job plus $21 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 July to be 12 jobs and 136 meals, but the actual activity was 13 jobs and 137 meals. The actual cost for catering supplies in July was $4,770. The catering supplies in the planning budget for July would be closest to:

Miao Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,980 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:

Nicolini 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 October, the kennel budgeted for 2,200 tenant-days, but its actual level of activity was 2,250 tenant-days. The kennel 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 activity variance for wages and salaries in October would be closest to:

Dancause Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,090 units. The company has provided the following data concerning the formulas to be used in its budgeting: -The direct materials in the flexible budget for October would be closest to:

Kari 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 3,200 tenant-days, but its actual level of activity was 3,230 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 spending variance for food and supplies in May would be closest to:

Febbo Clinic bases its budgets on the activity measure patient-visits. During February, the clinic planned for 3,200 patient-visits, but its actual level of activity was 3,000 patient-visits. Revenue should be $54.00 per patient-visit. Personnel expenses should be $39,400 per month plus $16.70 per patient-visit. Medical supplies should be $1,300 per month plus $10.90 per patient-visit. Occupancy expenses should be $11,600 per month plus $2.00 per patient-visit. Administrative expenses should be $5,400 per month plus $0.30 per patient-visit. Required: Prepare a report showing the clinic's activity variances for February. Indicate in each case whether the variance is favorable (F) or unfavorable (U).