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Exam 9: Flexible Budgets and Performance Analysis

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Question 141

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Dubberly Corporation's cost formula for its manufacturing overhead is $30,600 per month plus $64 per machine-hour. For the month of March, the company planned for activity of 7,900 machine-hours, but the actual level of activity was 7,880 machine-hours. The actual manufacturing overhead for the month was $558,610.The activity variance for manufacturing overhead in March would be closest to:

A) $22,410 U
B) $22,410 F
C) $1,280 F
D) $1,280 U

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Question 142

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Rients 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 October. When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October.The spending variance for "Other expenses" for October would have been closest to:

A) $400 F
B) $3,625 F
C) $400 U
D) $3,625 U

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Question 143

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Kirnon Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,550 client-visits, but its actual level of activity was 3,490 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: The activity variance for personnel expenses in July would be closest to:

Difabio 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 June, the school budgeted for 1,070 students and 90 courses. The actual activity for the month was 1,370 students and 95 courses.Required:Prepare the school's flexible budget for the actual level of activity in June.

During June, Montera Clinic budgeted for 3,800 patient-visits, but its actual level of activity was 3,400 patient-visits. Revenue should be $25.20 per patient-visit. Personnel expenses should be $22,600 per month plus $7.00 per patient-visit. Medical supplies should be $800 per month plus $4.80 per patient-visit. Occupancy expenses should be $6,900 per month plus $0.90 per patient-visit. Administrative expenses should be $4,800 per month plus $0.40 per patient-visit.Required: Prepare the clinic's flexible budget for June based on the actual level of activity for the month.

Leist Clinic uses client-visits as its measure of activity. During September, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,170 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting: The medical supplies in the flexible budget for September would be closest to:

Neeb 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 7,040 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 manufacturing overhead in the flexible budget for January would be closest to:

Spohn Clinic uses client-visits as its measure of activity. During February, the clinic budgeted for 3,400 client-visits, but its actual level of activity was 3,370 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for February: The net operating income in the planning budget for February would be closest to:

Willow Clinic bases its budgets on patient-visits. During October, the clinic plans for a level of activity of 2,270 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.

Performance reports with more than one cost driver typically have more accurate variances than those based on one cost driver. A) $(35,960) B) $(2,145) C) $2,240 D) $7,850

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 amount shown for revenue in the planning budget for April would have been closest to:

Heise Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for July was based on 3,500 meals. The diner's director has provided the following cost data to use in the budget: groceries, $2.35 per meal; kitchen operations, $4,000 per month plus $1.80 per meal; administrative expenses, $2,800 per month plus $0.60 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 report showing the diner's spending variances for each of the expenses and for total expenses for July. Label each variance as favorable (F) or unfavorable (U).

Chimilio Clinic uses client-visits as its measure of activity. During June, the clinic budgeted for 3,400 client-visits, but its actual level of activity was 3,360 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for June:Data used in budgeting: Actual results for January: The medical supplies in the flexible budget for June would be closest to:

Petrus Framing's cost formula for its supplies cost is $1,730 per month plus $11 per frame. For the month of March, the company planned for activity of 613 frames, but the actual level of activity was 618 frames. The actual supplies cost for the month was $8,670. The activity variance for supplies cost in March would be closest to:

Nobriga Corporation uses customers served as its measure of activity. During October, the company budgeted for 29,000 customers, but actually served 33,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October: Data used in budgeting: Actual results for October: Required: Prepare a report showing the company's revenue and spending variances for October. Label each variance as favorable (F) or unfavorable (U).

Duprey Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 2,200 client-visits, but its actual level of activity was 2,150 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 administrative expenses in the planning budget for January would be closest to:

Prestridge 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 August. When the company prepared its planning budget at the beginning of August, it assumed that 31 customers would have been served. However, 29 customers were actually served during August.The activity variance for total expenses for August would have been closest to:

Groupe 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 $48,840 per month plus $2,381 per flight plus $7 per passenger. The company expected its activity in October to be 63 flights and 293 passengers, but the actual activity was 61 flights and 298 passengers. The actual cost for plane operating costs in October was $199,070. The activity variance for plane operating costs in October would be closest to:

Trevorrow Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During June, the company budgeted for 6,200 units, but its actual level of activity was 6,160 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:Data used in budgeting: Actual results for June: The activity variance for net operating income in June would be closest to:

An unfavorable activity variance for revenue indicates that activity was less than expected when the static planning budget was developed.