Exam 9: Flexible Budgets and Performance Analysis

Higgenbotham Clinic uses client-visits as its measure of activity.During May,the clinic budgeted for 3,600 client-visits,but its actual level of activity was 3,580 client-visits.The clinic has provided the following data concerning the formulas to be used in its budgeting for May: -The net operating income in the planning budget for May would be closest to:

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.

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 activity variance for selling and administrative expense in March would be closest to:

A flexible budget:

It may be easier to control fixed costs than variable costs.

Weisgarber Clinic uses client-visits as its measure of activity.During August,the clinic budgeted for 3,900 client-visits,but its actual level of activity was 3,850 client-visits.The clinic has provided the following data concerning the formulas to be used in its budgeting for August: -The personnel expenses in the planning budget for August would be closest to:

Barringer 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 7,900 machine-hours rather than 7,800 machine-hours?

Mulry Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for September was based on 3,000 meals,but the diner actually served 2,800 meals.The diner's director has provided the following cost data to use in the budget: groceries,$2.45 per meal;kitchen operations,$4,900 per month plus $1.65 per meal;administrative expenses,$3,600 per month plus $0.60 per meal;and fundraising expenses,$1,200 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 September.

Faggs Corporation bases its budgets on the activity measure customers served.During December,the company planned to serve 33,000 customers,but actually served 36,000 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 December.Indicate in each case whether the variance is favorable (F) or unfavorable (U).

Palczewski 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 5,000 units,but its actual level of activity was 4,980 units.The company has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for net operating income in December would be closest to:

Brattain 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 1,140 square feet.The company's owner budgets for supply costs,a variable cost,at $2.10 per square foot.The actual supply cost last month was $3,260.In the company's flexible budget performance report for last month,what would have been the spending variance for supply costs?

Aslanian Memorial Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for November was based on 2,200 meals,but the diner actually served 2,700 meals.The diner's director has provided the following cost formulas to use in budgets: Required: Prepare a report showing the activity variances for each of the expenses and for total expenses for November.Label each variance as favorable (F) or unfavorable (U).Label each variance as favorable (F) or unfavorable (U).

Razor 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 November,the kennel budgeted for 3,000 tenant-days,but its actual level of activity was 3,010 tenant-days.The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for November: -The spending variance for expendables in November 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 spending variance for manufacturing overhead in August would be closest to:

Eisner 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 October,the school budgeted for 1,490 students and 85 courses.The school's income statement showing the actual results for the month appears below: Required: Prepare a report showing the school's activity variances for October.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:

During June,Defee Clinic plans for an activity level of 3,200 patient-visits.Revenue is $50.80 per patient-visit.Personnel expenses are $35,300 per month plus $16.70 per patient-visit.Medical supplies are $1,400 per month plus $8.50 per patient-visit.Occupancy expenses are $12,500 per month plus $2.60 per patient-visit.Administrative expenses are $7,200 per month plus $0.20 per patient-visit. Required: Prepare the clinic's planning budget for June.

Kimbril 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 $530 per month plus $91 per job plus $12 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 January to be 27 jobs and 174 meals,but the actual activity was 31 jobs and 173 meals.The actual cost for catering supplies in January was $5,330.The activity variance for catering supplies in January would be closest to:

Marchi Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion.The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms.The Inn's overhead budget for the most recent month appears below: The Inn's variable overhead costs are driven by the number of guests.What would be the total budgeted overhead cost for a month if the activity level is 70 guests?

Mcgannon Clinic uses patient-visits as its measure of activity.During November,the clinic budgeted for 3,700 patient-visits,but its actual level of activity was 4,100 patient-visits.The clinic uses the following revenue and cost formulas in its budgeting,where q is the number of patient-visits: Revenue: $23.90q Personnel expenses: $20,800 + $7.90q Medical supplies: $800 + $3.50q Occupancy expenses: $6,100 + $1.30q Administrative expenses: $3,100 + $0.10q The clinic reported the following actual results for November: Required: Prepare the clinic's flexible budget performance report for November.Label each variance as favorable (F) or unfavorable (U).