Exam 9: Flexible Budgets and Performance Analysis

Clune Clinic bases its budgets on the activity measure patient-visits.During October,the clinic planned for an activity level of 2,100 patient-visits,but the activity level was actually 2,600 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 October based on the actual level of activity for the month.

Naval 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 $430 per month plus $99 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 12 jobs and 126 meals,but the actual activity was 9 jobs and 124 meals.The actual cost for catering supplies in March was $2,550.The catering supplies in the planning budget for March would be closest to:

Kary Clinic uses patient-visits as its measure of activity.During May,the clinic budgeted for 3,800 patient-visits,but its actual level of activity was 4,100 patient-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for May: Required: Prepare a report showing the clinic's revenue and spending variances for May.Label each variance as favorable (F) or unfavorable (U).

Nasson 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 6,700 units,but its actual level of activity was 6,730 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: -The manufacturing overhead in the flexible budget for August would be closest to:

Gorley 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 3,900 tenant-days,but its actual level of activity was 3,940 tenant-days.The kennel has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for net operating income in February would be closest to:

Grundhoefer 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 April,the kennel budgeted for 2,000 tenant-days,but its actual level of activity was 1,990 tenant-days.The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: -The activity variance for net operating income in April would be closest to:

Spraque 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 $40,520 per month plus $2,733 per flight plus $11 per passenger.The company expected its activity in June to be 71 flights and 207 passengers,but the actual activity was 70 flights and 205 passengers.The actual cost for plane operating costs in June was $239,580. -The activity variance for plane operating costs in June would be closest to:

A revenue variance is unfavorable if the actual revenue is less than what the revenue should have been for the actual level of activity for the period.

Legard 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 January,the kennel budgeted for 2,600 tenant-days,but its actual level of activity was 2,620 tenant-days.The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for January: -The spending variance for expendables in January would be closest to:

Gamon Memorial Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for April was based on 3,600 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 flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for April.Label each variance as favorable (F) or unfavorable (U).

Kaaihue Detailing's cost formula for its materials and supplies is $2,750 per month plus $17 per vehicle.For the month of April,the company planned for activity of 95 vehicles,but the actual level of activity was 135 vehicles.The actual materials and supplies for the month was $4,850. -The spending variance for materials and supplies in April would be closest to:

Bessey Hospital bases its budgets on patient-visits.The hospital's static planning budget for January appears below: -The spending variance for occupancy costs in the flexible budget performance report for the month is:

Kalinowski 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 2,300 tenant-days,but its actual level of activity was 2,320 tenant-days.The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for February: -The facility expenses in the flexible budget for February would be closest to:

Lapinsky 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 $31,400 per month plus $2,148 per flight plus $7 per passenger.The company expected its activity in April to be 89 flights and 261 passengers,but the actual activity was 84 flights and 260 passengers.The actual cost for plane operating costs in April was $204,810.The spending variance for plane operating costs in April would be closest to:

The main difference between a flexible budget and a static budget is that a flexible budget does not contain fixed costs.

Murphree Clinic uses client-visits as its measure of activity.During April,the clinic budgeted for 3,300 client-visits,but its actual level of activity was 3,350 client-visits.The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for April: -The net operating income in the planning budget for April would be closest to:

Cahalane Natural Dying Corporation measures its activity in terms of skeins of yarn dyed.Last month,the budgeted level of activity was 11,600 skeins and the actual level of activity was 12,000 skeins.The company's owner budgets for dye costs,a variable cost,at $0.31 per skein.The actual dye cost last month was $3,540.In the company's flexible budget performance report for last month,what would have been the spending variance for dye costs?

Vandall Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During April,the company budgeted for 7,300 units,but its actual level of activity was 7,340 units.The company has provided the following data concerning the formulas used in its budgeting and its actual results for April: -The spending variance for manufacturing overhead in April would be closest to:

A flexible budget is an estimate of what revenues and costs should have been,given the level of activity that had been planned for the period.

A favorable spending variance occurs when the actual cost is less than the amount of that cost in the flexible budget.