Exam 2: Flexible Budgets and Performance Analysis

Mondo Snow Removal's cost formula for its vehicle operating cost is $1,060 per month plus $429 per snow-day. For the month of January, the company planned for activity of 11 snow-days, but the actual level of activity was 13 snow-days. The actual vehicle operating cost for the month was $6,310. The activity variance for vehicle operating cost in January would be closest to:

Sonner 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 September, the school budgeted for 1,760 students and 156 courses. The actual activity for the month was 1,560 students and 153 courses. Required: Prepare the school's flexible budget for the actual level of activity in September.

Halm Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for August was based on 3,000 meals. The diner's director has provided the following cost data to use in the budget: groceries, $3.85 per meal; kitchen operations, $4,600 per month plus $1.15 per meal; administrative expenses, $3,800 per month plus $0.85 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 flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for August. Label each variance as favorable (F) or unfavorable (U).

Labombard Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 3,600 client-visits, but its actual level of activity was 3,650 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 administrative expenses in the planning budget for February would be closest to:

Halbrooks Clinic bases its budgets on the activity measure patient-visits. During December, the clinic planned for 2,600 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: The clinic has also furnished its income statement for December: Required: Prepare a report showing the clinic's activity variances for December.

Cruea 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 November, the school budgeted for 1,410 students and 138 courses. The actual activity for the month was 1,810 students and 139 courses. Required: Prepare the school's planning budget for November.

Sekuterski 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 $45,700 per month plus $2,892 per flight plus $4 per passenger. The company expected its activity in November to be 81 flights and 283 passengers, but the actual activity was 80 flights and 282 passengers. The actual cost for plane operating costs in November was $286,360. The plane operating costs in the flexible budget for November would be closest to:

Zenon 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 3,300 tenant-days, but its actual level of activity was 3,260 tenant-days. The kennel 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 net operating income in the flexible budget for July would be closest to:

Blaney 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 October, the company budgeted for 456 guests and 115 jeeps. The actual activity for the month was 446 guests and 111 jeeps. Required: Prepare the company's flexible budget for the actual level of activity in October.

Juenemann 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 December, the kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,770 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Actual results for December: -The wages and salaries in the planning budget for December would be closest to:

Ochwat Clinic bases its budgets on the activity measure patient-visits. During July, the clinic planned for 3,600 patient-visits, but its actual level of activity was 4,100 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).

Hatzenbuhler Manufacturing Corporation has prepared the following overhead budget for next month. The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 6,600 machine-hours rather than 6,800 machine-hours?

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 activity variance for administrative expenses in May would be closest to:

Letts 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 7,000 units, but its actual level of activity was 6,970 units. The company has provided the following data concerning the formulas to be used in its budgeting: -The cleaning equipment and supplies in the planning budget for September would be closest to:

During October, Haubold Corporation budgeted for 30,000 customers, but actually served 29,000 customers. Revenue should be $3.80 per customer served. Wages and salaries should be $31,200 per month plus $1.40 per customer served. Supplies should be $0.70 per customer served. Insurance should be $8,500 per month. Miscellaneous expenses should be $3,700 per month plus $0.10 per customer served. Required: Prepare the company's flexible budget for October based on the actual level of activity for the month.

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

Lynne 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 $480 per month plus $91 per job plus $14 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 June to be 10 jobs and 79 meals, but the actual activity was 14 jobs and 77 meals. The actual cost for catering supplies in June was $2,970. The catering supplies in the flexible budget for June would be closest to:

Ishibashi Snow Removal's cost formula for its vehicle operating cost is $1,240 per month plus $337 per snow-day. For the month of February, the company planned for activity of 17 snow-days, but the actual level of activity was 12 snow-days. The actual vehicle operating cost for the month was $5,140. The spending variance for vehicle operating cost in February would be closest to:

Smithj 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 3,500 tenant-days, but its actual level of activity was 3,490 tenant-days. The kennel 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 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 February would be closest to:

Mcindoe Clinic bases its budgets on the activity measure patient-visits. During May, the clinic planned for an activity level of 3,200 patient-visits, but the activity level was actually 3,600 patient-visits. The clinic has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare the clinic's flexible budget for May based on the actual level of activity for the month.