Exam 2: Flexible Budgets and Performance Analysis

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 activity variance for cleaning equipment and supplies in September would be closest to:

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 administrative expenses in September would be closest to:

During November, Guerreiro Clinic budgeted for 2,200 patient-visits, but its actual level of activity was 2,500 patient-visits. Revenue should be $49.00 per patient-visit. Personnel expenses should be $30,700 per month plus $14.70 per patient-visit. Medical supplies should be $1,800 per month plus $6.50 per patient-visit. Occupancy expenses should be $7,600 per month plus $1.40 per patient-visit. Administrative expenses should be $4,700 per month plus $0.10 per patient-visit. Required: Prepare the clinic's flexible budget for November based on the actual level of activity for the month.

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 net operating income in the planning budget for 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 spending variance for food and supplies in March would be closest to:

A revenue variance is unfavorable if the actual revenue is less than the revenue in the static planning budget.

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 selling and administrative expenses in the planning budget for December would be closest to:

Gesmondi Corporation bases its budgets on the activity measure customers served. During October, the company planned to serve 24,000 customers, but actually served 28,000 customers. The company has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare a report showing the company's activity variances for October. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Dus 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 $400 per month plus $89 per job plus $10 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 March to be 11 jobs and 81 meals, but the actual activity was 7 jobs and 76 meals. The actual cost for catering supplies in March was $1,810. The activity variance for catering supplies in March would be closest to:

Kestner Clinic uses patient-visits as its measure of activity. During September, the clinic budgeted for 3,000 patient-visits, but its actual level of activity was 2,900 patient-visits. The clinic 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: Required: Prepare the clinic's flexible budget performance report for September. Label each variance as favorable (F) or unfavorable (U).

Grossenbacher Clinic bases its budgets on the activity measure patient-visits. During January, the clinic planned for 3,800 patient-visits, but the actual level of activity was 3,700 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 January. Indicate in each case whether the variance is favorable (F) or unfavorable (U).

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 spending variance for food and supplies in February would be closest to:

Buonocore Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 2,800 client-visits, but its actual level of activity was 2,770 client-visits. The clinic 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 spending variance for medical supplies in August would be closest to:

Beecham Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for October was based on 3,400 meals, but the diner actually served 3,200 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 report showing the activity variances for each of the expenses and for total expenses for October. Label each variance as favorable (F) or unfavorable (U).

Danoff Midwifery's cost formula for its wages and salaries is $1,540 per month plus $497 per birth. For the month of March, the company planned for activity of 112 births, but the actual level of activity was 107 births. The actual wages and salaries for the month was $56,850. The activity variance for wages and salaries in March would be closest to:

Larance Detailing's cost formula for its materials and supplies is $2,230 per month plus $1 per vehicle. For the month of November, the company planned for activity of 75 vehicles, but the actual level of activity was 25 vehicles. The actual materials and supplies for the month was $2,160. -The activity variance for materials and supplies in November would be closest to:

Wesolick Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 2,900 client-visits, but its actual level of activity was 2,870 client-visits. The clinic 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 medical supplies in the flexible budget for August would be closest to:

An unfavorable activity variance indicates that activity was too high for the amount of sales.

Vangemert Corporation uses customers served as its measure of activity. During June, the company budgeted for 22,000 customers, but actually served 25,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $5.30q Wages and salaries: $35,400 + $1.90q Supplies: $0.70q Insurance: $9,600 Miscellaneous expense: $5,000 + $0.10q The company reported the following actual results for June: Required: Prepare a report showing the company's revenue and spending variances for June. Label each variance as favorable (F) or unfavorable (U).

Zike 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 6,000, the actual supplies cost was $14,740, the actual power cost was $49,170, the actual salaries cost was $15,390, and the actual equipment depreciation was $63,670. -The spending variance for supplies cost in the flexible budget performance report for the month should be: