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Exam 9: Flexible Budgets and Performance Analysis

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Question 101

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Meinke 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 3,700 tenant-days, but its actual level of activity was 3,680 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for April: Data used in budgeting: Actual results for April: -The activity variance for wages and salaries in April would be closest to:

A) $128 U
B) $342 F
C) $128 F
D) $342 U

E) All of the above
F) A) and B)

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Question 102

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Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 3,500 client-visits, but its actual level of activity was 3,490 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: -The net operating income in the flexible budget for January would be closest to:

A) $6,364
B) $13,500
C) $13,312
D) $6,400

E) A) and C)
F) B) and C)

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Question 103

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Courington Detailing's cost formula for its materials and supplies is $2,420 per month plus $9 per vehicle. For the month of August, the company planned for activity of 63 vehicles, but the actual level of activity was 33 vehicles. The actual materials and supplies for the month was $2,840. Why such a great disparity between the planned and actual level of activity from 63 to 33 vehicles - should these be closer together? Please keep as is. -The spending variance for materials and supplies in August would be closest to:

Ruozzo Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for July. When the company prepared its planning budget at the beginning of July, it assumed that 27 customers would have been served. However, 22 customers were actually served during July. -The activity variance for net operating income for July would have been closest to:

Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 2,000 client-visits, but its actual level of activity was 2,010 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: -The activity variance for administrative expenses in July would be closest to:

Benjamin Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of March, it assumed that 26 containers would have been refurbished. However, 23 containers were actually refurbished during March. -The amount shown for revenue in the planning budget for March would have been closest to:

Schriever Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. The number of wells serviced in the planning budget is missing from the given information - this information is necessary to complete the calculations in the subsequent questions. The planning budget for May was based on 36 wells serviced, but aA total of 31 wells were actually serviced during May. -The activity variance for "Servicing materials" for May would have been closest to:

Lochner Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for June. When the company prepared its planning budget at the beginning of June, it assumed that 24 wells would have been serviced. However, 26 wells were actually serviced during June. -The activity variance for "Employee salaries and wages" for June would have been closest to:

Kekiwi 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 6,900 units, but its actual level of activity was 6,910 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Actual results for January: -The net operating income in the flexible budget for January would be closest to:

Willow Clinic bases its budgets on patient-visits.During October,the clinic plans for a level of activity of 2,100 patient-visits.The clinic has provided the following data concerning the formulas it uses in its budgeting: Required: Prepare the clinic's planning budget for October.

Younker Corporation is a shipping container refurbishment company that measures its output by the number of containers refurbished.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for April. When the company prepared its planning budget at the beginning of April,it assumed that 31 containers would have been refurbished.However,34 containers were actually refurbished during April. The spending variance for "Other expenses" for April would have been closest to:

Schriever Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. The number of wells serviced in the planning budget is missing from the given information - this information is necessary to complete the calculations in the subsequent questions. The planning budget for May was based on 36 wells serviced, but aA total of 31 wells were actually serviced during May. -The activity variance for net operating income for May would have been closest to:

Virgen 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 3,700 tenant-days, but its actual level of activity was 3,690 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:

Neubert 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 5,300 units, but its actual level of activity was 5,340 units. The company 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 direct labor in the planning budget for December would be closest to:

Milot Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for April. When the company prepared its planning budget at the beginning of April, it assumed that 32 wells would have been serviced. However, 29 wells were actually serviced during April. -The "Servicing materials" in the flexible budget for April would have been closest to:

In a flexible budget,what will happen to fixed costs as the activity level increases?

During December,Hynes Corporation plans to serve 35,000 customers.Revenue is $2.00 per customer served.Wages and salaries are $24,600 per month plus $0.50 per customer served.Supplies are $0.30 per customer served.Insurance is $5,400 per month.Miscellaneous expenses are $4,100 per month plus $0.10 per customer served. Required: Prepare the company's planning budget for December.

Leven Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 3,050 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for September: -The administrative expenses in the planning budget for September would be closest to:

Wagster Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for November was based on 2,400 meals.The diner's director has provided the following cost data to use in the budget: groceries,$2.05 per meal; kitchen operations,$4,500 per month plus $1.75 per meal; administrative expenses,$3,500 per month plus $0.20 per meal; and fundraising expenses,$1,700 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 November.Label each variance as favorable (F)or unfavorable (U).

Adamyan Urban Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for May was based on 3,700 meals,but the diner actually served 3,200 meals.The diner's director has provided the following cost data to use in the budget: groceries,$2.10 per meal; kitchen operations,$5,700 per month plus $1.55 per meal; administrative expenses,$3,800 per month plus $0.35 per meal; and fundraising expenses,$1,500 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 May.